BY STEVEN MAYER Californian staff writer firstname.lastname@example.org
Did Texas Gov. Rick Perry snatch a growing company from its home in Kern County?
Or does California make it easy for companies to say adios?
A commercial aerospace firm based in eastern Kern County announced Monday that it is expanding its operations to Texas, a move characterizied by some observers as an avoidable economic loss to Kern County and the state as a whole.
XCOR Aerospace, a manufacturer of reusable rocket engines and the developer of the Lynx, a suborbital space plane designed to carry two persons or scientific experiments to the edge of space, announced the move Monday at a press conference in Midland, Texas, the site of its new research and development center.
The center will be created over the next 18 months in an existing hangar on the flightline at Midland International Airport. The company, which expects to grow from about 30 employees to more than 100 over the next five years, has centered its operations at Mojave Air and Space Port for more than a decade.
Despite the move, some operations will remain in Mojave, including commercial launches of the Lynx once flight testing is completed, said XCOR Chief Executive Jeff Greason, who was in Texas for the announcement.
"I personally will be one of those moving to Midland," Greason said. "I take no pleasure in leaving Mojave. I love Mojave. But I had to do what's best for the company."
Indeed, Greason has described the growing space port in eastern Kern as "the Silicon Valley of the private space industry" and the premier location for civilian flight research and testing in the United States.
But California's less favorable tax and regulatory environment -- and its inability to pass timely liability protection for companies planning to invest in commercial space tourism -- made it easier to make the move, he said.
"We did look at three or four other sites," he said. "Each had different strengths. But the folks in Midland were very persuasive."
Gov. Perry was on hand Monday to welcome XCOR.
"This is a great day for Midland and a huge step forward for the State of Texas," Perry said. "Visionary companies like XCOR continue to choose Texas because they know that innovation is fueled by freedom."
Marv Esterly, director of airports in Midland, suggested Texas is aggressively courting aerospace companies from other states.
"This new R&D facility has the potential to open the door to even more economic development at our airport and for our community," he said at the press conference.
Pam Welch, executive director of the Midland Development Corporation, made it even more clear Midland is targeting out-of-state businesses.
"The decision to establish XCOR's research and development center headquarters in Midland came after intense competition from other locations," she said. "Once the technical and operational needs of XCOR were met, the final factors influencing the decision to locate R&D to Midland included the friendly business climate, a predictable regulatory environment, and the state of Texas tort reform initiatives."
The organization estimated XCOR will generate $12 million in new payroll and capital investment over the next five years, with an estimated average annual salary of more than $60,000.
In order to accommodate XCOR's flight test needs, Midland must apply to the Federal Aviation Administration for a commercial space launch site designation. Once the application is granted, Midland will have "space port" status, similar to Mojave's.
Stu Witt, CEO and general manager of Mojave Air and Space Port, said the loss of XCOR to Texas shouldn't have happened.
"You can have the tax or you can have the business, but you can't have both," Witt said.
While XCOR is still relatively small, the company has done more rocket engine tests than any private company in the world, Witt said. With the end of NASA's space shuttle program and the coming commercialization of space flight, XCOR is poised for growth.
Over the past few years, Witt and Greason have travelled to the state capital to push for the passage of liability reform, a law that would set limits on civil damages should a space tourist be killed or injured in a mishap. But they've had no luck. In the meantime, Texas has passed tort reforms.
'We're in an ax fight and we don't have an ax," Witt said. "These other states have been aggressive in taking away businesses in California -- because it's easy."
Witt said he's lost two other companies, both aviation-based, to out-of-state interests in the past two years. One went to Arizona, the other to Texas.
Nevertheless, despite tax and environmental concerns, Mojave's story has been more about winning businesses than losing them. When Witt came to Mojave a decade ago, the airport had about 14 business tenants generating a few hundred jobs. Today there are more than 65 tenants and close to 2,500 jobs, including massive commercial space projects by Virgin Galactic and The Spaceship Company.
And there's been help on the regulatory question as well.
Earlier this year, Rep. Kevin McCarthy, R-Bakersfield, the House majority whip, was able to insert a provision in the Federal Aviation Administration reauthorization bill that extended a moratorium on federal regulations in the commercial spaceflight industry to October 2015.
The measure passed with bipartisan support in both houses.
While Greason applauded the federal legislation at the time, he told The Californian the congressional action would not affect the regulatory authority exercised by the state of California, which he says has remained onerous and expensive to follow.
Meanwhile, California Assembly Bill 2243, which would give commercial space flights qualified immunity from liability for injuries caused by the inherent risks associated with space flight, has passed through the Assembly and is headed to the state Senate for consideration. This was further than it has prodeeded before and Greason and Witt had said they saw it as an encouraging sign.