This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx /-------------------- advertisement -----------------------\ Explore more of Starbucks at Starbucks.com. http://www.starbucks.com/default.asp?ci=1015 \----------------------------------------------------------/ Have Municipality, Will Travel to Paris Air Show June 21, 2003 By EDWARD WONG LE BOURGET, France, June 18 - At the Paris Air Show this week, there are the usual missile makers and bomb builders, the helmet hawkers and flight suit fashionistas. Then there is the Arizona Department of Commerce. It has a booth in Exhibition Hall 3 right across from Amsafe Aviation, a company based in Phoenix that makes airplane seat belts. "The perfect climate for aerospace" reads the slogan on a bright orange backdrop, printed near the photos of Monument Valley and an Apache Longbow attack helicopter. "We're obviously trying to position Arizona as an attractive location for foreign aerospace companies so they can choose this state as their U.S. base," said Sally Spray, director of the international trade and investment division at the department. "We want to say, `Bring it to Arizona, it's a good strategic location.' " The state is not alone. Nearby sit the booths of both the Oklahoma Department of Commerce and the State of Maryland, whose lieutenant governor recently stopped by. Cincinnati is in the neighborhood, too, as well as New York, southwest Florida, Virginia and Washington State, according to the list of exhibitors. The severe budget crises afflicting American municipalities have sent them scrambling to find new sources of investment. They are going out of their way to offer incentives like tax breaks and factory sites to companies willing to set up local operations. In recent years, many states have opened economic development offices abroad to draw in investors from the global marketplace. Arizona, for instance, has representatives in Mexico, Europe, Japan and Taiwan. The Paris Air Show, the largest gathering of military contractors and aerospace companies in the world, has become the states' latest hunting ground. It is an especially auspicious time to promote the benefits of setting up shop in United States because the weakening dollar makes the country a more attractive manufacturing base. But it is competitive here at the show. Maryland rented a sprawling booth. Oklahoma's is just slightly bigger than a Parisian bathroom. But that state is not shy about advertising its offerings in big words on one of its backdrops: "Cash for jobs created" and "tax exemptions." Ms. Spray, meanwhile, said Arizona could boast of, among other things, "365 golf courses, one for every day of the year." She groused about New York and California. They have name recognition, she said, and foreign companies often gravitate to them even though Arizona has lower operating costs and right-to-work laws that result in a low level of unionization at workplaces. "We're not a huge incentive state," she added. "We don't say, `Here's a check for 29,000 euros' or whatever. But we do have enterprise zones. We can tailor those financially to people." Like many manufacturing businesses, aerospace companies worldwide have increasingly played municipalities against one another to squeeze out the best incentives. In May, the Boeing Company announced it was taking proposals from any state that wanted to be the site for final assembly of Boeing's next jetliner, the 7E7. Lawmakers in Washington State, where Boeing does final assembly of all but one of its commercial jets, scrambled to offer tax breaks and other incentives to keep Boeing there, a push that led to a tax incentive package valued at $3 billion over 20 years if Boeing stays. In fact, Snohomish County, where Boeing does final assembly of its wide-body jets, has a small exhibit here with brochures sitting beneath a "Home of Boeing" sign. In recent decades, Bombardier, the Canadian regional jet maker, received lavish incentives and free factories from countries in which it set up plants, said Robert Lamb, a professor of management at the Stern School of Business at New York University, who has studied aerospace companies and the economies of municipalities. Bombardier also arranged with governments to buy its planes in exchange for its presence, he added. Professor Lamb said it was not surprising that states had shown up at the Paris Air Show because they were desperate to drum up revenue any way they can. "There's a need for so much new business," he said. "You have to pay money to make money. You have to pay out for infrastructure buildup. You need to do roads, water. The things they are doing are much bigger than light industrial planning." The danger, he said, is in putting too much hope into cyclical businesses - like many aerospace companies - that lay off large numbers of people during downturns. Yet states continue to court such companies. Kara H. Smith, director of European operations at the Oklahoma Department of Commerce, looked up from a laptop at her booth to talk about her state's recent history of attracting foreign aerospace investment. First, she said, there is Lufthansa Technik, which services business jets in the Tulsa area. Then there is Labinal, a French electronics manufacturer that set up a plant in 1997 in Pryor Creek. Asked about the companies she was focusing on at this air show, Ms. Smith declined to identify them or discuss specific incentives, citing competitive reasons. For two months before the show, she said, she had four workers calling companies and sending out letters to talk up the state and set up appointments. Representatives of Oklahoma attend four or five aerospace trade shows each year, she added. "Our strategy is to focus on what we're world-class at," said Ms. Smith, who works out of the Netherlands. "And aerospace is what we're highly competitive at." Mary Smith, executive director of the Aerospace Alliance of Tulsa, said there were 143,000 aerospace jobs in the state, with almost a fifth of that in the Tulsa area. She estimated that the industry brought in $3.2 billion to the city each year. American Airlines has its largest maintenance base in Tulsa, she said, where it employs 9,200 people and has attracted 200 suppliers to the area. Part of Ms. Smith's job is to find overseas companies to add to that number. Many foreign companies set up shop in the United States in hopes that they will be regarded more favorably by American politicians and government officials, something that is especially important for military contractors. Rainer Hertrich, the co-chief executive of the European Aeronautic Defense and Space Company, or EADS, said he wanted officials to stop mentally associating his company with just Europe. He pointed out that the company had plants and research offices in Mississippi and Alaska. A company's nationality should be defined by where it gives the most "added value," he said, meaning in part where it creates jobs. The states here have also set up their booths to push the products of companies based in their regions. Small aerospace companies that might not have been able to afford to come on their own can piggyback onto the exhibition spaces of the states. Ms. Spray, the Arizona representative, said the state spent about $60,000 to have a presence at the show but was charging small companies from Arizona to share its display. A couple of executives from one of those companies, Advanced Training Systems International, were milling around next to Ms. Spray. The company, based in Mesa, Ariz., has a fleet of a dozen fighter jets that it uses to train military pilots from foreign governments like the United Arab Emirates. Its instructors, including pilots who have attended the Navy's "top gun" school and flown with the Blue Angels, are also paid to engage in mock dogfights with customers. Its slogan: Train to Fight, Fight to Win. "This is a real cost-effective way for a company like us to be at the show," said Charles Stanford Jr., the chief financial officer. "This show is a central meeting point for all of our worldwide customers." And there are more potential clients to win over. "We want to go meet the Canada people in a minute," Ms. Spray said to Mr. Stanford. "Sorry, but we can't join you," he said. "We've got a meeting at 6:30. I've got to get back to the hotel first." "Canada's having a reception," Ms. Spray said. "But I'll mention you. Maybe we can set something up." http://www.nytimes.com/2003/06/21/business/21AIR.html?ex=1057216275&ei=1&en=3f60995832bf0126 --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! Click here: http://www.nytimes.com/ads/nytcirc/index.html HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@xxxxxxxxxxx or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@xxxxxxxxxxxx Copyright 2003 The New York Times Company