Long Beach revives aerospace past in new ‘Space Beach’ era – Long Beach Business Journal

Rocket Lab’s Electron rocket blasts off from its New Zealand complex in May. The mission, dubbed “Running out of Toes,” was the company’s 20th launch. Photo by Andrew Taylor, courtesy of Rocket Lab.

The U.S. has entered a new era in space exploration, and Long Beach is determined to be right at the center of it.

Once ruled by government agencies, the current wave of innovation in the aerospace industry is largely driven by private companies, from Elon Musk’s SpaceX to the space divisions of Richard Branson’s Virgin. In an effort to establish the city as “Space Beach,” Long Beach is now hoping to cash in on its long-standing heritage in the aerospace industry to secure its share of the space tech pie.

“The past and the future [are] coming together in space for the city,” Mayor Robert Garcia, who coined the “Space Beach” nomer, said during an economic forum in July. “It’s about satellites, it’s about rockets, it’s about space—and Long Beach is in the middle of that.”

Long Beach’s history as a hub for the aerospace industry has proven to be an asset in this effort.

“A lot of the skills that people learned in that traditional aerospace and defense [industry] transition well to space tech,” said Nick Schultz, executive director of the workforce development agency Pacific Gateway. “I think we’re really prepared.”

The departure or withdrawal of traditional aerospace companies in recent years, most notably Gulfstream and Boeing, has dealt a blow to the local industry and its workforce.

After Boeing’s announcement that it would scale down its Long Beach operations starting in 2005, local employment in aerospace dropped from 9,424 in 2008 to just over 4,200 in 2015, the year the last C-17 plane left Boeing’s local manufacturing facility. That number would drop to a historic low of 2,828 workers in the industry three years later.

But since then, aerospace in Long Beach has undergone a significant revitalization, and the workforce gains are clear. Last year, employment in the industry once again crossed the 4,000 mark, and the numbers are trending upward. Currently, local economists predict aerospace employment to be around 6,500, a 48% increase since 2018.

In the past two years alone, several space companies large and small have made commitments in the area around the Long Beach airport and beyond.

In February 2020, rocket manufacturer and launch service provider Relativity Space announced that it would build out its 120,000-square-foot headquarters in Long Beach, and the company has since announced that it’s also taking over Boeing’s former C-17 site. SpaceX is moving into 6.5 acres at the Port of Long Beach. Morf3d, a parts manufacturer that specializes in 3D-printing for the aerospace industry, announced that it would gradually move its headquarters from El Segundo to Long Beach, starting in the first quarter of 2022.

For Ivan Madera, CEO of Morf3D, the concentration of space-bound companies in Long Beach, compared to more traditional aerospace conglomerates like Raytheon, Boeing and Northrup near Los Angeles International Airport, presented a significant incentive.

“It made sense for us to move more towards the new space regime,” said Madera, whose company’s customers include Relativity Space, as well as Long Beach-based Rocket Lab and Virgin Orbit.

Virgin Orbit’s LauncherOne rocket deploys from the firm’s modified Boeing 747. Photo courtesy of Virgin Orbit.

Together, the companies that form this “new space regime” are poised to make up for what was lost over the past two decades.

“When a large aerospace operation leaves, with that also go some of the supply chain and suppliers,” local economist and chair of Cal State Long Beach’s Economics Department Seiji Steimetz said.

But with the relocation and expansion of several high-profile space companies into the city in recent years, the tide has turned. “All these technical, high-paying jobs come back too,” Steimetz noted.

Maintaining the educational infrastructure to fill those positions has been key to the city’s success in revitalizing its aerospace industry.

Over the past two years, 159 workers registered for services with the city’s workforce development agency to help them transition and market their skills through counseling, training and hiring fairs, easing their path into the new space tech industry. And 80% of those who exited the program have found full-time and fully benefited employment with average hourly earnings above $42, according to Pacific Gateway.

And each year, more engineers are trained at local educational institutions.

Counting about 1,700 students currently enrolled and 300 graduates entering the workforce each year, mechanical and aerospace engineering is the largest department within Cal State Long Beach’s College of Engineering.

With a growing local demand for highly skilled workers, department chair Jalal Torabzadeh’s students have found it easy to find work after they leave the school, he said.

“Many of our graduates had a job, even before graduation,” Torabzadeh said. “Some of them have several offers.”

The average pay is high. In total, the industry’s payroll in Long Beach comes out to $600 million, according to Steimetz’s analysis of confidential data provided by the labor market data company Emsi, with its share of payroll in the city outpacing its share of employment—another indicator for above-average pay.

“I’m absolutely confident that this new Space Beach evolution is on the right path to replace the employment and output that was lost,” Steimetz said. But, he added, “that kind of economic growth doesn’t happen in a vacuum.”

Local experts agree that in order to keep the momentum going, the city has to remain active in creating a welcoming environment for aerospace companies, especially as it competes with other cities and states nationwide that hope to secure their share of the budding industry.

Cost—both for companies and the workers they hope to attract—is a major factor.

“It’s California—it’s the most expensive place to do business in the world,’ said Peter Beck, CEO of Rocket Lab, which maintains manufacturing sites across the country and the world. To some extent, that cost difference can be made up through financial benefits, such as tax incentives, he noted. “That’s probably where Long Beach faces a lot of competition.”

Currently, the city does not offer a local tax incentive program specifically for aerospace companies, but such a program is being considered as part of the “Space Beach” initiative, according to Schultz, who also serves as the deputy director of the city’s Economic Development Department.

The state, though, already offers such incentives in a program the city currently supports as a conduit between local companies and the Governor’s Office of Business and Economic Development (GO-Biz).

“Aerospace is one of the state’s main targets,” Schultz said. As for a local tax incentive, “the city is weighing the options to do that,” he added.

Keeping real estate both in the commercial and residential sector affordable will be another crucial component of sustaining the growth of Long Beach’s new space industry.

A photo of Morph3D’s new headquarters at Douglas Park, with the company logo superimposed. Image courtesy of Morph3D.

Madera, of Morf3D, said the cost and amenities of their new Douglas Park headquarters were a major selling point compared to their current location in El Segundo, as was the relative affordability of workforce housing. “It’s going to be super important that [the city] continue their effort to support that type of environment,” Madera said.

The more companies have moved to Long Beach, the larger the pool of local experts and skilled workers has grown, which has also attracted more startups to the city.

“All these new companies—it’s drawing new people to the area,” said Ian Balllinger, CEO of Nuspace, a new iteration of Keystone, a company that has manufactured parts for the transportation sector in the Los Angeles area since 1903 and moved its headquarters to Long Beach in 2007, as it zeroed in on supplying aerospace companies.

Ballinger said he expects further growth, both in the form of newly founded companies as well as through mergers and acquisitions. “This is really the start of the next generation of the space industry.”

To facilitate collaboration among local players as the industry grows, the city has convened a group of the 26 largest companies, the Long Beach Aerospace Council, which came together for its first meeting in early 2020, just before the pandemic.

“We convene as the neutral broker to connect them to the other resources and get their needs recognized at scale,” Schultz said. “They drive the agenda.”

Looking back at the loss of Boeing’s manufacturing site and the industry’s potential to rebound over the next 10 years, Schultz and other experts express a profound sense of optimism. “I think you could easily see employment in space technology double within a decade,” he said.

“That C-17 closure wasn’t the end of the story. It was just the beginning.”

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Long Beach revives aerospace past in new ‘Space Beach’ era – Long Beach Business Journal