Jason Holdaway, Patrick Fraser, Casey Allen and Bryan Tweedy are South Dakota School of Mines & Technology engineering graduates who are working on cutting-edge technology for the defense industry.
That’s not odd except for one thing: They are all working in Rapid City.
The engineers, mostly young, all from this area, are working at a growing number of private companies, many of which are developing new technology nurtured at the School of Mines to repair or replace broken parts on bombers, fighters, helicopters and tanks, which are being worked hard in the wars in Iraq and Afghanistan.
All this activity has resulted in hundreds of good jobs for engineers and other highly skilled people and millions of dollars in research contracts for the School of Mines and the private firms.
More than 15 private-sector companies that employ 400 to 600 people are involved in the local military industry, according to estimates by the Rapid City Economic Development Partnership. The exact number is difficult to determine because some companies prefer to stay “under the radar,” due to the sensitive nature of their work, said Ben Snow, president of the Economic Development Partnership.
Average wage for the primary work force is just under $15 an hour. That doesn’t include salaries for management and highly technical staff, Snow said. Average wage for the area’s retail and tourism industries is just under $10 an hour.
In addition, Snow said Sturgis has recruited a cluster of companies, including arms manufacturers, which are estimated to employ more than 100 people.
Jim Hutto, president of H.F. Webster, a relatively new firm in Rapid City, said defense-related companies such as his create high-tech, high-paying jobs.
Snow’s group and the Governor’s Office of Economic Development have been supportive, Hutto said. “They’ve gone beyond what their normal model is for assisting companies,” he said. Hutto said state officials initially noted that he was not planning to hire very many people.
Hutto responded that his 10 employees would draw salaries equal to those of 62 retail clerks.
He said, for example, he is paying each of his three engineers well over $50,000 annually. That’s not unusual for engineering jobs, but Mines grads typically have to leave the state to get any kind of engineering job.
Mark Merchen, immediate past president of Black Hills Vision, pointed to RPM & Associates as a local firm whose work for the military has added to its already strong position in using lasers to make and repair equipment for power plants.
In the midst of a national economic downturn, RPM has added employees, raised salaries and paid bonuses, said RPM President Rob Mudge.
The high-tech jobs bring highly paid, highly trained people, Merchen said. “They go to our grocery stores, they go to our theaters, they buy cars in our communities. They spend their paychecks here, not in San Diego or Boston.”
The Mines/private industry efforts also have drawn millions of dollars in Department of Defense research projects.
Mines will directly receive almost $7 million for defense-related research in Fiscal Year 2010. Private firms in western South Dakota are slated to receive more than $8 million for defense projects (see list).
Most of the growth is related to cutting edge technology aimed at repairing parts on military planes, vehicles and equipment.
The whiz-bang technology includes:
Friction stir welding - Welding with a device that doesn’t actually melt metal but makes it gooey enough to join. Called friction stir welding, the process can be used to repair parts such as fuel line cooling ducts on B-1 bombers much more cheaply than replacing them.
Laser deposition technology - Shooting a laser beam into powdered metal to fabricate or repair a metal part such as a gas turbine engine frame used in military aircraft. Again, the repair cost using this laser deposition technology is a fraction of replacement.
The idea is to take processes that Mines scientists were working on and try to move them to the private sector to help solve problems facing the military.
“For example, instead of having to put in thousands of fasteners, you can do these new welding techniques such as stir welding and have a smoother surface, reducing drag,” said Pat McElgunn, vice president of government affairs for the Rapid City Area Chamber of Commerce. “Drag is a big deal when you’re flying an airplane,” said McElgunn, a retired Air Force officer.
Credit for the growth starts with the School of Mines, say the private-sector leaders.
“There’s a really powerful connection between the School of Mines and industry in Rapid City,” Snow said. “We’re really proud of what Mines has done in pushing to get stronger linkages to industry.”
Mines’ Office of Technology Transfer, headed by Butch Skillman, is aimed at transferring technology from Mines to practical applications in the private sector.
Hutto said his firm, H.F. Webster, has an agreement with Mines to use its Advanced Materials Processing Center.
“I don’t think the state and region realize the hidden jewel we’ve got here,” Hutto said, referring to Mines.
H.F. Webster is slated to get $1.2 million in the 2010 defense bill.
Among other examples is Dakota Power Inc., run by Dick Gowen, a former Mines president. Dakota Power works on lightweight electrical drive systems for military vehicles, using a technology developed by the late Bill Hughes at Mines. Dakota Power is getting $1.6 million in the 2010 defense bill.
But there are other firms, too, that are getting in on work for the military.
They include Lakota Industries, which plans to locate in Timber Lake and Rapid City. In Rapid City, Lakota Industries will be doing water transfer technologies for military applications, Snow said. That technology allows camouflage print to be placed on any hard surface, such as weapons or other military equipment, he said.
Another cog in the machine has been the state’s congressional delegation, which has cooperated to get federal money for continuing research at Mines and the private firms.
That funding comes in the form of earmarks, which have been called “pork” by some critics of the earmark system. Others say earmarks, as long as they are discussed and approved through the congressional committee process, are a better way to allocate federal funds than decisions by un-elected bureaucrats.
Hutto, a retired Air Force officer, who during his military career, served as a congressional liaison at the Pentagon, is effusive in his praise of Sens. Tim Johnson and John Thune and Rep. Stephanie Herseth Sandlin. “We have a congressional delegation second to none in terms of listening to folks and supporting initiatives.”
Hutto, whose company is three years old, also praises economic development officials such as Snow and Merchen, as well as mentors such as RPM’S Mudge, whose firm has been in existence for more than 25 years.
Hutto is trying to model his firm after RPM.
“Having financial and business advice has been kind of neat,” Hutto said. “Guys fall out of the woodwork to help you.”
Distance a challenge
Snow said one challenge South Dakota faces in drawing companies that serve the military is its distance from big cities and the coasts. Many of the bigger defense companies are in California, or near Washington, D.C. “It helps to be located next to them,” Snow said. “But it’s not a deal killer for us as evidenced by all these companies that are doing great stuff out here,” he said.
South Dakota ranks consistently in the top 20 percent of states for business climate because it has no personal or corporate income taxes, no personal property tax, and no business inventory tax, he said. It also has a hands-off approach to gun manufacturing and ownership, offers affordable unemployment and workers compensation insurance, and is a right-to-work state, giving unions less power.
Snow also said local firms also are trying to find commercial uses for military research as well.
“Government contracts are good when you can get them. But I think it’s wise for any firm to have some commercial customers so they’re not so dependent on the next defense appropriations bill, plus the timing at which government contracts move is glacial at times,” Snow said.
Hutto hopes to diversify H.F. Webster, in the same manner as RPM. RPM began and still operates primarily as a company serving the power-plant industry.
So far, more than 70 percent of H.F. Webster’s business is for the defense industry.
“The government is really great to do business with when they’re doing business,” Hutto said. But he said priorities can change, so he hopes to expand his work to commercial applications, including the coal industry in Wyoming. “We want to develop a little more diversified clientele if government orders come to a halt.”
But defense spending on high-tech solutions to worn parts likely won’t decline soon, says McElgunn.
McElgunn doesn’t see such high-tech research ending even when the wars in Iraq and Afghanistan wind down, partly because the Department of Defense is in the process of supplying the military with lighter, more agile vehicles and equipment.
Meanwhile, with the ongoing wars, military equipment, vehicles and airplanes are being used longer and harder than planned.
The B-1s are a good example, said Hutto, who flew B-1s at Ellsworth. He noted that the bombers are now 25 years old and parts are wearing out. “Those guys have been deployed for eight years. They’re really beating up that equipment.”
That is providing work in Rapid City for engineers such as Jason Holdaway, Patrick Fraser, Casey Allen and Bryan Tweedy.
Holdaway, of Rapid City, and Fraser of Huron, both Mines grads, work at RPM and are developing a new laser deposition system. Holdaway said he probably couldn’t stay in Rapid City without RPM’s military work.
Allen and Tweedy, also Mines grads, came back from good jobs in Kansas to work at H.F. Webster. Allen, originally from Alliance, Neb., formerly managed the Advanced Materials Processing center at Mines.
Tweedy, originally from Yankton, ran the National Institute for Aviation Research at Wichita State, before coming back to Rapid City.
Allen, the general manager at Webster, said he came back for three reasons: his family, the Black Hills and the professional challenge.
“I really like the location, the outdoor activities. My family does, too,” he said. Allen is a mountain biker, hiker, hunter and snow boarder.
Allen, 41, said being closer to his family in Alliance is important now that his parents are getting older.
Besides, Allen said the work at H.F. Webster is his professional dream. “I feel like it’s what I’ve been preparing my whole professional life to do.”
The growth in military work here will continue to expand opportunities for South Dakotans with highly technical skills, Allen said.
He points to H.F. Webster as evidence. “Obviously, we’re here. And we’re just getting ramped up.”
Contact Steve Miller at 394-8415 or firstname.lastname@example.org.