PNS MRO campus takes off
Pensacola is home to a new maintenance, repair and overhaul facility, but an infusion
of funding promises to expand the operation and make it a major MRO hub...

David Tortorano
August 2018

The plan is to create a large maintenance, repair and overhaul campus at Pensacola
International Airport, and if all that’s being promised comes to fruition, it will elevate
the city’s position in the aerospace/aviation industry well beyond being the “Cradle of
Naval Aviation.”

The proposed campus will increase the MRO footprint four-fold – giving Pensacola
one of the largest MRO complex’s in the nation in a state that is No. 2 in the field. It
will create more jobs than the aircraft maintenance positions that were lost in the
1990s when the Naval Aviation Depot at Naval Air Station Pensacola was closed.

“I consider this to be an incredibly important project. As an individual who is a lifelong
resident of Pensacola, this is truly a transformational moment for this area,” said Dan
Flynn, director of Pensacola International Airport.

“It’s a great visionary project that’s being led by Mayor Ashton Hayward and the city
of Pensacola,” said Scott Luth, CEO of FloridaWest Economic Development. “We are
excited to be a part of that team to bring this opportunity to Pensacola and Northwest
Florida.”

Luth, like Flynn, call it a “transformational project for the community” which, before
the new hangar opened this summer had no MRO operations.

Last month Triumph Gulf Coast, the group that distributes recovery money resulting
from the 2010 BP oil spill, gave preliminary approval for $56 million in funding to
expand the maintenance, repair and overhaul (MRO) complex at Pensacola
International Airport.

The MRO campus, which had a grand opening in June 2018 for the 173,000-square-
foot VT Mobile Aerospace (VT MAE) hangar - now called ST Engineering Aerospace
- will add three additional hangars – two of them larger than the current hangar –
under this $335 million project.

According to information supplied by the applicant to Triumph Gulf Coast, upon
completion the airport campus will be the second largest MRO complex in North
America. But the source of that claim is unclear.

In addition to the $56 million for the Pensacola project, Triumph Gulf Coast gave
preliminary approval for an $8.5 million grant for infrastructure for the Whiting
Aviation Park in Milton. The plan is to eventually have a smaller MRO hangar for
military and civilian aircraft at the park next to Naval Air Station Whiting Field (story
page 4).

Triumph Chairman Don Gaetz said the investments “will directly create over 3,100
high-paying jobs” and grow Northwest Florida as a leader in aerospace.

All of this comes at a time when the MRO field is growing. According to Aviation Week’
s MRO-Network, the global MRO industry expects to grow from total gross revenues
of $75.6 billion in 2017 to an estimated $109.2 billion in 2027.1

“As the leader in this industry, ST Aerospace and its subsidiary VT MAE will likely
experience a similar growth pattern in the future,” according to information supplied
to Triumph Gulf Coast by the applicants.

The funds for Pensacola is contingent upon obtaining more than $75 million now
being sought from city, county, state and federal sources and $59 million in
commitments to the project by private companies.

The next step for the Pensacola and Whiting projects is agreement on a term sheet
that will stipulate the obligations of all funding partners and include performance
requirements and a “claw back” that would allow Triumph to reclaim its funds if jobs
aren’t created and sustained, as committed by the private and public sponsors of the
proposals.

First hangar
It was seven years ago that Pensacola officials and VT MAE first started talking about
opening an MRO at the airport. The company, which has had an MRO operations in
Mobile since 1991, looked at South Mississippi, South Alabama and Northwest
Florida for an expansion site before opting for a 19-acre site in Penscola.2

The $46 million MRO facility in Pensacola had its official grand opening June 8, 2018
with a ribbon-cutting on the north side of the airport. In attendance was Gov. Rick
Scott. During the event, a UPS aircraft, the first customer, was in the hangar for
routine maintenance and served as a backdrop.

The hangar can hold two 777s, four 757s with winglets or six A320s, according to
Flynn.

The building of the first hangar for ST Engineering Aerospace was called phase one.
A second hangar was in the initial layout plans, officials said. That second hangar,
along with two more, will happen with phase two.

The entire campus will be 112 acres, including the acreage with the first hangar. In
addition to the first hangar, it will add two 191,000-square foot and one 173,000-
square-foot hangars, 100,000 square feet of warehouse and shop space, a 120,000-
square-foot administrative office building and associated roadways, taxiways, as well
as aprons.

The land and buildings will be leased to ST Engineering Aerospace, subject to a long-
term real property lease. The entire MRO development will be city-owned assets of
the airport, according to the applicants.

Phase two of the MRO Aviation Campus will create at least 1,325 jobs at an average
annual salary of $44,461 plus benefits. When combined with the 400 new jobs
associated with the first hangar, total aerospace sector jobs employed directly by ST
Engineering Aerospace would be 1,725. That’s more than the 1,000 workers at the
10-hangar, 900,000-square feet it has at the Mobile Aeroplex.

In addition to the direct ST Engineering Aerospace jobs, additional full time
equivalent jobs directly related to the aviation and aerospace industry will be located
at the airport. That includes about 77 administrative and engineering staff, 60 full
time customer airline engineering jobs on site to oversee the repair and maintenance
protocols associated with their aircraft, and an additional 16 vendor and auditor
positions.

The project will also require some 25 non-aerospace jobs in security, maintenance
and janitorial services. And, under discussion, is the opportunity for establishing
about 63 North America executive and senior administrative jobs at the Pensacola
MRO Campus.

What precisely that might mean is not clear. “It’s just not something we can speculate
on,” said Flynn.

Smart MRO and training
The MRO in Pensacola is part of VT Systems of Alexandria, Va., a wholly-owned
subsidiary of Singapore-based ST Engineering, which has been the world’s top MRO
operation for years.

The state-of-the-art facilities to be developed in the MRO Aviation campus will use
“Smart MRO” technologies. The company’s engineers, technicians, and mechanics
will use next generation methods at the Pensacola campus, including laser scan
technology and 3D (additive manufacturing) to fabricate parts; drones for remote
aircraft inspection; composites for appropriate aircraft; and robotics. In 2017, ST
Engineering acquired Pittsburgh-based Aethon.

Along with the use of cutting-edge techniques, the campus is also envisioned as a
location for education and training. Plans are to establish within the MRO hangars a
training center for secondary education providers to prepare students for careers in
the commercial aviation maintenance. The plan is to enhance existing workforce
development programs at Washington High School (Aviation Maintenance Academy),
George Stone Technical Center (Airframe and Power plant Technology) and
Pensacola State College.

In addition, this proposed project will assist in transitioning veteran military personnel
to commercial aviation and aerospace jobs. A near-term vision is the collaboration
between ST Engineering Aerospace and local education providers will create an
MRO Aviation Training Academy to develop the workforce needed for the available
jobs and to maintain a pipeline of trained technicians for the future.

Investment and spinoffs
Upon completion of the campus, ST Engineering Aerospace will have invested about
$75 million of its own funds, according to the Triumph Gulf Coast document.

Provided that funding and lease terms can be successfully negotiated in the coming
months, design work on the new facilities could begin this year and construction of a
second hangar could begin in 2019. Design and construction of the other MRO
campus facilities could conceivably be completed by the end of 2021.

As with any project of this size, the expectation is that it will result in luring suppliers
to the Pensacola area. The applicants pointed out that ST Engineering Aerospace
will spend some $35 million annually in the procurement of airplane and non-airplane
components from about 1,200 vendors, and said the supply chain activity could lead
to the relocation of suppliers to the region.

Such a large MRO complex would more than make up for the 2,500 maintenance,
repair and overhaul jobs that were lost in the 1990s when the Naval Aviation Depot
(NADEP) at Naval Air Station Pensacola was shut down as a result of the base
closure and realignment process.

Though NADEP shut down, there continued to be hundreds of maintenance workers
in the Pensacola metropolitan area.

1 Oliver Wyman, Global Fleet and MRO Market Forecast Summary, page 3.
2 Duwayne Escobedo, “One that didn’t get away,” Gulf Coast Aerospace Corridor Newsletter, October 2014, page
1.

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Industry’s return a boon for airport

You have to look back 25 years for the reason Dan Flynn is particularly excited about
the MRO campus planned for Pensacola International Airport.

“What I tell people when I’m talking to them is that this is bringing an industry back to
Pensacola that, unfortunately, had to go away a number of years ago,” said the
Pensacola airport director.

What went away was the Naval Aviation Depot (NADEP) at Naval Air Station
Pensacola, a huge military MRO that employed more than 2,000 people. It was
closed in 1993 during a Base Closure and Realignment round. And Flynn felt the
loss.

“It’s a little more personal for me because my brother, my older brother, is an
electrical engineer and he was working over at NADEP at that time,” said Flynn.
“When that was BRACd, all of those individuals and all of those skills left the area.”

Some were able to return.

“My brother had to go to Warner Robins (Ga.) for a while before he was able to,
fortunately, find another job with NAVAIR and be able to move back to the area, and
he’s been here since,” Flynn said.

“But this facility, this campus, brings that industry back to the area, so it is further
diversifying the economic base for the area itself,” he said. “It’s taken this long to
come full circle to be able to attract that back. And what makes it even better, it’s, not
only is the industry coming back it’s in its own sector. It’s no longer aviation trades
tied to the military it’s now aviation trades tied to the civilian market.”

But beyond the return of an industry, the MRO will diversify the airport’s revenue
base. The more income that can be generated from sources other than the airlines,
the better the chance for keeping their rate base from landing fees and other rents
low.

ST Engineering Aerospace currently add about $260,000 a year in ground rent.
Each additional hangar will increase the annual payment by about a quarter-of-a-
million dollars. “That helps offset fees that we would otherwise have to charge the
airlines. … So from the pure revenue side, its just wonderful.”

Flynn said the addition of the MRO can be leveraged by the airport as another
feature that may interest airlines.

“So it aides us in our air service development efforts when we go to an airline and we
say, ‘hey you know we have these things to offer at Pensacola and by the way, we
also have this maintenance facility who contracts with you and others that now has a
presence on the airport,’” Flynn said.

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