Business Aviation Rapidly Expands in the United States

Today, we open our blog to Mr. Frederick Metz Shepperd of Switzerland-based Quadral Group (www.quadralgroup.com). Frederick is also a member of Business Facilities' Editorial Advisory Board.

If I told you there was a North American-based industry that is undertaking facilities expansions of 50% to increase production, has delivery times for products extending into 2012 and 2013, and is receiving bonuses of $10 million for earlier delivery times, you would probably think I was crazy.

Yet this is all happening right now, in the midst of the doom and gloom on Wall Street. Smaller airports are finding new roles as economic drivers as European companies look for new production facilities and expand existing ones. Evidence of this trend was abundant at the European Business Aviation Association's recent annual convention in Geneva, Switzerland, attended by more than 14,000 industry executives.

Here are some of the players and some of the highlights:

• Embraer announced a new assembly facility for its Phenom jet at Melbourne International Airport in Florida. The total investment is $50 million, and the 150,000-square-foot-facility will employ 200 workers and will be completed by 2011.

• Outsourcing done by Cessna Aircraft Company in Wichita, Kansas is helping to grow suppliers like Parker Aerospace and Rockwell Collins, to name a few. Despite some outsourcing, Cessna plans to add 1,000 workers at its Kansas plant, on top of the 1,500 hired within the last 12 months.

• Bombardier, maker of Learjets in Georgia, in addition to the Challenger spacecraft and other business jets built near Montreal, announced a backlog of 30 months, representing the production of 2,571 new aircraft worth $63 billion.

• Honda Jet, based in the southeast United States, is in the final approval stages for European deliveries.

• Charter companies based in North America and abroad are racing to expand. For example, XOJet in California recently received $2.4 billion in financing to fund its global growth.

Growth is affecting all sorts of support industries and economic sectors related to business aviation. And what about all the suppliers to these companies? They are growing and moving too!

Take a closer look at that airport on the outskirts of a city. It may have the potential to be its own economic stimulus. Those big empty hangars? They can be new production centers for business aviation. Runway too short? Add some concrete and you may very well add some jobs. It is the closest thing you can get to jobs dropping from the sky.

Retail: Open for Business!

Back in May, Business Facilities ran a special advertising article on the retail industry, which highlighted a couple of U.S. retail hot spots. It also discussed the resilience of the industry, as it struggles to cope with and rebound from a shaky economy. Fortunately, the retail realm got a long-awaited boost thanks to the first round of federal economic stimulus checks reaching millions of Americans eager to hit the shops they've been too wallet-shy to visit.

An article from today's edition of the Chicago Tribune claims great gains for both our economy and the retail industry. The industry saw a 1% increase from last month, which is the largest jump since November. This windfall is double what most economists had predicted the stimulus checks' effect would have. As more checks reach consumers throughout the summer, it seems hopeful that the industry's mini-boom will continue, and that the U.S. economy will recover slightly from its "recessive tendencies," if not its full-blown recession.

Let's just hope that once the economic stimulus payments run dry, that our beloved retail industry can avoid another drastic dip in consumer activity. The Christmas shopping season never comes soon enough...

Not the Sheriff of Nottingham

Until recently, everyone in the current fiscal debacle has been playing their parts in a predictable manner.

Top banking execs who presided over multi-billion-dollar losses have parachuted out of the wreckage of their financial institutions clutching hideous ''retirement'' bonuses without a shred of shame.

Federal lawmakers who blissfully deregulated the banking industry and permitted it to morph into a Jupiter-sized Three Card Monte scam have expressed outrage over the scope of the disaster and sympathy for the victims, but have done virtually nothing to mitigate the damage or to prevent it from happening again.

TV talking heads have monotonously droned about the latest surge in foreclosures and the bloodless announcements of staggering losses reported by international banking giants. These depressing fiscal bulletins usually are sandwiched between breathless coverage of the latest American Idol casualty and speculation about whether Brad and Angelina will stay together long enough to name their twins.

Nameless bewildered homeowners have publicly expressed shock at the ''unfairness'' of losing a $2 million property for which they had put down $20,000 and signed a mortgage with interest rates that jumped from 5% to 500% after 24 months. Washed-up celebrities like Ed McMahon and Evander Holyfield get 15 minutes of crocodile tears from Larry King over the impending loss of their 50-acre mansions.

And, in cities and towns across the county, local law enforcement officers are executing court orders to seize foreclosed properties and auction them off.

Except, that is, in Philadelphia, because Sheriff John Green stood up in court and said ''no.''

According to a report in today's Wall Street Journal, Sheriff Green, who has worn a badge for 37 years, astounded the legal and financial movers-and-shakers in Philly when he refused to hold court-ordered foreclosure auctions, telling the judge he no longer has the stomach to take houses away from his friends and neighbors.

Without the sheriff and his 241-person department on board to enforce the court's action, foreclosures in Philadelphia ground to a halt. Then something interesting happened:

-- The City Council opened a legal umbrella over the sheriff's unilateral (and illegal) action by unanimously enacting a moratorium on foreclosures.

-- The judge who ordered the auctions asked civic leaders, lenders' attorneys and housing advocates to form a committee to determine which homeowners deserved a delay, aid through government programs, or at least a ''graceful exit'' from their house. The committee developed a streamlined process to make loans more affordable for delinquent homeowners who still live in their houses.

-- Homeowners were offered free lawyers for court-supervised ''conciliation sessions'' with their loan-servicing companies. Housing counselors were provided to help servicers and their lawyers assess borrowersÕ ability to pay. The lenders were not obliged to renegotiate the terms of the mortgages, but they were nudged by the court to ''make allowances.''

-- One of Philadelphia's largest law firms offered $1 million to finance borrowers' attorneys and counselors.

-- Finally, the judge ordered that sheriff sales on owner-occupied properties be suspended through next month to give all of these conciliatory activities time to mitigate the crisis.

Philadelphia has a well-earned reputation for being a very tough town. Its denizens once famously booed Santa Claus when he made an appearance at an Eagles football game.

But this month, thanks to a sheriff with a conscience, the City of Brotherly Love has lived up to its moniker.

The future arrives on 52nd street

We were standing on Sixth Avenue in the middle of Manhattan the other day, trying to hail a cab. The traffic was bumper-to-bumper and barely moving, and the cabs all had "off-duty" signs lit up, their drivers chattering on cell phones as they inched along.

We were about to give up and join the hordes on the sidewalk for a 20-block hike, when a pedicab rolled up next to us. The man pedaling the bicycle motioned to an open, raised divan he was pulling and urged us to get in. He told us he would take us to 52nd street for $12.

We stepped up into this bizarre chariot and sat on the mini-loveseat, which was surprisingly comfortable. Our "engine" pumped his legs, and we began a quiet, serene roll up Sixth Avenue.

Soon we were rolling briskly past all of the cars alongside us, who seemed like they were barely moving at all. Cab drivers gave us dirty looks. Pedestrians gawked in disbelief with what seemed like wonderment laced with jealously etched in their faces. We sat high above the street, refreshed by a mild breeze, admiring the chiseled cornices at the tops of the old buildings and the open sky.

With no meter to monitor and no driver to distract us with a phone call to his cousin in Yemen, our thoughts soon drifted.

We thought about the recent announcement from OPEC that it is powerless to stop the rising price of oil, now nearing $140 per barrel.

We thought about the news report which told us that the U.S. military, which consumes 340,000 barrels of oil each day, is sending up a B-1 stealth bomber filled with synthetic fuel on a test flight to see if it is possible to break the sound barrier using the fake stuff.

We thought about the TV interview with a guy from Japan Airlines, who said the carrier was switching to lighter plastic spoons in a desperate effort to save fuel on its jets. Another aircraft exec told the TV reporter that his company would soon start charging passengers $15 for each piece of checked luggage.

We thought about the gas station owner in Oklahoma, who was trying to adjust the price on his pumps to $4.06 per gallon only to discover that the pricing dials in the pump had not been built to go higher than $3.99.

A stretch limousine loomed ahead to our right. It seemed to be about 40 feet long. As we easily rolled passed, we could see some well-dressed passengers in the back seat. They were pointing at us and yelling at the driver. Probably something about paying $150 for a ride and getting clocked by an old man on a bicycle and a guy in a rumpled business suit who was laughing at them.

As we approached the next intersection, filled with gridlock, our human-powered vehicle easily glided between the stalled cars, our navigator happily ignoring the meaningless red traffic light.

We looked back over our shoulder. The stretch limo was motionless three blocks behind. As we rolled forward, it seemed to be going backward.

Our pedicab pulled up to the curb at 52nd street, less than 15 minutes after we had climbed aboard, but in what now seemed to us to be a different century. We handed the man $20. He smiled as he unzipped a leather pouch that was stuffed with cash and pushed our bill into the middle. He didnÕt say anything, but he gave us a knowing and amused look, as if he had just given us a gift that he knew would surprise and please us.

His smile said: "I am the future, and I am already here."

And then he pedaled away, looking for his next customer. A blaring car horn interrupted our reverie. It was the limo driver, demanding that we get out of his way.

The Importance of Taking the "LEED"

This summer, Business Facilities is devoting a lot of editorial coverage to businesses going green; our June cover story will look at location trends among green-technology companies. Also, our July annual rankings report will highlight the 20 greenest states in America based on comprehensive analysis of nine criteria, one of which is number of LEED-certified buildings by state.

The LEED (Leadership in Energy and Environmental Design) Green Building certification program is a feature-oriented rating system that awards buildings points for satisfying specified green building criteria. On May 15, the U.S. Green Building Council (USGBC) testified before Congress about the importance of LEED-certified projects.

"Buildings are the single largest contributor to carbon dioxide (CO2) emissions, accounting for 39% of emissions in the U.S. Of those buildings, school buildings represent the largest construction sector in the country and 20% of America goes to school every day," says Michelle Moore, senior VP, Policy and Public Affairs for USGBC. "It's fundamental to promote the design and construction of green schools, which play a tremendous role in bettering the health and performance of our students and children. Every new building coming out of the ground today should built green and every existing building should be retrofitted, whether it is an office building, a school, or your own home. Buildings offer an immediate, measurable solution for mitigating climate change, and we don't have time to wait."

Currently, 12 federal agencies or departments, 28 states, more than 120 local governments, 12 public school jurisdictions, and 36 higher education institutions have made policy commitments to use or encourage LEED ratings. Many states even offer incentives to businesses looking to go green.

Don't read this before you eat lunch!

For as long as we can remember, tourists heading for Mexico have been warned: ''Don't drink the water!''

Well, if you're planning to fill up a couple of jugs with tap water in Los Angeles or San Diego before you head to Tijuana, you might want to think twice.

According to a report in today's Wall Street Journal, L.A. is poised to announce plans to recycle 4.9 billion gallons of treated wastewater to ''drinking standards'' by 2019.

A number of other major metropolitan areas facing water shortages are moving in the same direction: San Diego recently approved a pilot project to pump treated wastewater into its local reservoir, and Miami-Dade County, Florida, is planning a system that will pump 23 million gallons of recycled wastewater into an aquifer that will feed wells in the area.

''Treated wastewater'' is a polite way of saying ''sewage.''

This euphemism probably was coined by the same guy who came up with ''certified pre-owned vehicle'' to describe a used car with 98,000 miles on the odometer and cigarette burns on the front seat, currently being offered by your local dealer for the highly discounted price of $12,500 (the warranty expires as soon as you pull off the lot).

Wastewater recycling initiatives have been put forward periodically in recent years, as major population centers have continued to expand while water resources remain, well, stagnant. These projects usually have been pushed off the agenda by what the Journal calls ''the yuck factor'' -- critics labeled them ''toilet to tap'' proposals.

Not any more. The rate at which demand is outpacing supply apparently has hit a tipping point that renders the ''yuck factor'' irrelevant.

Besides, even if ultra-hygienic types in L.A. and San Diego manage to pull together a movement to beat back the sewage recycling plans, they still will be ingesting treated wastewater: 400 million gallons of it is discharged into the Colorado River every day.

Of course, Angelenos always will have the option of jumping into their corn-powered vehicles and taking a four-hour excursion on the freeway to purchase a month's supply of bottled water at $5 per gallon jug.

Try not to notice the friendly convenience store clerk filling the jugs with a hose behind the Quik-Chek.

China's Road-building Investment in Congo

In developed nations, access to major roadways is taken for granted. We have six-lane dual carriageways, networks of precisely paved arteries cutting in and out of big cities, and transcontinental highways stretching for thousands of miles. Even those shady side streets and pot-holed back alleys are there when you need them--in my case, when I'm lost (regularly) and need to make a K-turn.

But a recent article in The Washington Post details the lack of highway infrastructure in a growing, but largely undeveloped country, Congo (formerly Zaire). However, a mutually (though perhaps not equally) beneficial road-building deal between the Congolese government and China will bring new transportation opportunities to mining cities in the north and south of Congo, connecting them to western ports. The Chinese, in return, will create its own lucrative inroad into the African nation's rich mining industry.

While this business agreement may seem a world away to economic developers who can proudly tout and sell their extensive and upgraded transportation routes, the anecdotal information in the Post's article is also eye-opening. It details how the grading and smoothening of one, 30-mile dirt road leading to the village of Kilongo has brought beer, electronics, and prostitutes, to name a few, um, "goods" to the once-isolated community.

Check out the full story for a good read. Here's one fascinating stat: "Congo, a country the size of Western Europe, with vast natural resources, has less than 3,000 miles of paved road. Virginia, by comparison, has about 70,000 miles."

Emerald City

They broke ground earlier this year for the headquarters of Masdar City, which according to its sponsors will be ''the world's first zero-carbon, zero-waste, car-free city fully powered by renewable energy.''

Masdar City is the $22 billion showpiece of Abu Dhabi, the largest of the seven United Arab Emirates. It will be constructed over seven phases and is due to be completed by 2016.

The headquarters building is the first phase, slated to be finished by 2010. Its builders say it will be the world's first large-scale, mixed-use positive energy building, producing more energy than it consumes. The complex will utilize sustainable materials and feature integrated wind turbines, outdoor air quality monitors and one of the world's largest building-integrated solar energy arrays.

Masdar's headquarters is being designed by Adrian Smith + Gordon Gill Architecture of Chicago, which was selected by a global jury of seven world-reknowned design and urban planning experts from a field of 159 competitors. The Chicago firm emerged from 15 finalists who had met the sustainability criteria set for the Masdar project, including water and wastewater efficiency, indoor environmental quality, zero carbon emission, and carbon footprint reduction.

This is an impressive project, and Abu Dhabi deserves a tip of the hat for doing its part in the sustainable development movement. But if the Emirate is going to boast about its plans to reduce the size of its carbon footprint, we think it would be useful to measure the foot:

-- Abu Dhabi currently sits on 9.5 percent of global crude oil proven reserves, about 98 billion barrels.

-- Abu Dhabi is the world's third largest oil exporter, behind only Saudi Arabia and Russia.

-- Abu Dhabi is earning approximately $400 million per day in oil and gas revenues. It is surging ahead with a $20 billion program -- roughly the amount it has earmarked for Masdar City -- to expand its crude oil production capacity from a current level of 2.8 million barrels-a-day to up to 4 million barrels-a-day by 2015.

Extra-credit quiz question: What is going to have a bigger impact on Abu Dhabi's carbon footprint during the next seven years, Masdar City or a 40% increase in crude oil production?

When the Masdar headquarters opens in 2010, no doubt the global trade press will be invited for a VIP tour. We're going to wait until the landscaping on the project is completed. We even have a few ''decorating'' tips, which we now offer free of charge to the Emirate:

No zero-carbon city is complete without a synthetic North Pole and a couple of rain forests, which can be populated by cloning some of the hundreds of species that have disappeared in the recently completed Century of Big Oil.

Give us a comfortable chair under a lush canopy of trees, a bottle of Stoli chilled in a bucket of Arctic ice, and a couple of Siberian tigers to look at, and we're there.

Happy Birthday, Spike

On May 1, 1931, President Herbert Hoover pressed a button in Washington, D.C. and the lights went on in the Empire State Building for the first time.

For a nation mired in the depths of a Great Depression, the world's tallest building was much more than an engineering marvel. It was a 1,472-foot-high beacon of hope.

Even before the remains of the old Waldorf-Astoria Hotel were completely cleared from the 83,860-square-foot site on Fifth Avenue, an army that would grow to 3,400 construction workers prepared to lay the framework for what would become a 102-story, 37 million cubic foot behemoth.

These were the fortunate few who had meaningful work when so many of their neighbors were idle. They threw themselves into the task, logging 7 million man hours in a year, working through Sundays and holidays. It was almost as if they thought the project would disappear if they put down their hammers and pails and took a break.

The building rose at the incredible rate of 4.5 stories per week, facilitated by a special rail line that connected the building site directly to steel mills in Pennsylvania. The steel was still warm when it was riveted into place on the mammoth structure rising over Manhattan.

The interior lobby was lined with ceiling-high marble brought over from Europe on ships. From the sixth floor to the top, the exterior was covered with Indiana limestone and granite, trimmed with aluminum and chrome-nickel steel. Even using the best materials, the total cost came in at less than half of the original $50 million estimate.

It took less than 14 months to build the Empire State Building.

It is hard to reconcile that accomplishment with the current state of affairs in the nation's largest city. Most of the large-scale civic projects in New York are suspended in limbo, tangled up in petty disputes and a jungle of red tape.

Whether it's a new train station, an expanded convention center, or the complex planned for the World Trade Center site, the only thing that seems to be rising is the estimated cost of construction, as politicians and developers jockey for position and bicker over who is to blame for the delays.

The city that has always astounded us with the audacity of its dreams no longer seems able to summon the willpower to make them a reality. New York has lost its mojo.

Message to New Yorkers: You don't need a subway map to find it. If you have temporarily forgotten what is possible when spirit, grit and imagination are joined in common purpose, there is a powerful and majestic reminder nearby.

It is standing there in front of you, right where King Kong left it. All you have to do is look up.

Recession What?

These days it's hard to stay up on the news without being subjected to talk of recession this and recession that. Now, there's no arguing that the U.S. economy has fallen on trying times, but it's nice to temper the bad with the good for some perspective. So in the spirit of optimism, I thought it would be a refreshing change of pace to veer away from talk of our "doomed" economy and highlight two recent major investment projects that promise to bring thousands of jobs to those in need.

Well-known for its troubled economy, Michigan has been working hard over the past few years to breathe life into a fresh new economy, one that is much less dependent on its automotive roots and more focused on high-tech and life sciences companies. Progressive incentive programs such as the 21st Century Jobs Fund have been helping with the transition.

In April, Michigan residents had much reason to rejoice when the state scored one of the largest non-automotive deals in MichiganÕs history--at a time when the stateÕs unemployment rate is the highest in the nation at 7.2%. Thanks to a $330 million investment by life sciences company MPI Research Inc., Michigan stands to gain 3,300 new direct jobs and an additional 3,300 indirect jobs over the next 15 years. The company, which provides comprehensive pre-clinical research and development services, plans to more than double its current one-million-square-foot facility in Mattawan, MI, as well as launch new operations in Kalamazoo, MI at two closed Pfizer facilities in downtown Kalamazoo that Pfizer is donating to the city. Assistance provided by the Michigan Economic Development Corporation (MEDC) helped convince the company to choose Michigan over competing sites in the U.S. and China.

Based on the MEDCÕs recommendation, the Michigan Economic Growth Authority board approved a state tax credit valued at $86 million over 15 years for MPI. The MEDC is also recommending the downtown Kalamazoo site receive designation as a tax-free Renaissance Zone and that a $2 million grant previously awarded to Western Michigan University be used instead for redevelopment activities at the Kalamazoo site. Through the transportation economic development fund, the Michigan Department of Transportation will chip in and provide funding for improvements at or near the I-94 interchange that are necessary to accommodate the traffic generated by MPIÕs expansion. In addition, local match requirements will be provided by the village of Mattawan. The city of Kalamazoo is also lending a helping hand by way of $150,000 toward environmental due diligence and infrastructure analysis.

The MPI Research expansion is one of five economic development projects the governor announced in April. In all, they are expected to create and retain a total of 9,013 Michigan jobs.

Meanwhile, down south, the Tar Heel State will soon see 900 new, high-paying jobs as a result of GE-Hitachi Nuclear Energy's recent investment promise. The company, which could receive more than $25 million in state incentives for new job creation, plans to invest $704 million to add manufacturing, training, simulation, and testing facilities at its 1,300-acre campus in New Hanover County, NC, near Wilmington. Part of the expansion could also include a commercial uranium enrichment facility. A joint venture of General Electric and Hitachi, GE-Hitachi Nuclear Energy already employs more than 2,000 people in the county.

While wages for all the new jobs will vary, the overall average wage will be about $85,000 a year not including benefits--more than double the New Hanover County average of $33,226.

Unfortunately, these new jobs won't fix skyrocketing gas and food costs, but it is success stories such as these that will hopefully pave the way to brighter economic times for the United States. These stories also reinforce the need for states, and the nation as a whole, to focus economic development energies (and monies) on transitioning to a primarily knowledge-based economy to help our great nation become great again.