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Going on offense to lure defense industry

Incentives legislation could create designation to encourage economic investment in businesses tied to military, aviation

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Sea Box Inc. was founded three decades ago, but it was only around 2006 that the maker of shipping containers started to grow dramatically.

That was when the Riverton company saw an explosion in business from defense contractors such as Lockheed Martin and outposts like Joint Base McGuire-Dix-Lakehurst, said Jay Frederick, its vice president for operations. Sea Box tapped into that demand by supplying everything from containerized shower facilities to mobile machine shops.

"Defense and aerospace in this area, and other areas, have helped us to grow drastically," said Frederick, whose firm in about six years has grown from 40 employees to more than 200, while expanding its New Jersey footprint from 37,000 to 550,000 square feet.

Sea Box is global company, but it's among hundreds of firms of all sizes reliant upon New Jersey's defense and aerospace industries. The two areas make up a $5.4 billion sector that planning advocates in the state hope to grow and fortify in the coming years, largely through clustering and economic development incentives.

The industries would benefit under legislation aimed at overhauling New Jersey's business incentives. Under an Assembly version of the measure, defense and aviation would be among the state's "targeted industries," allowing such businesses to qualify for bonus tax credits under a revamped Grow New Jersey program.

The legislation, dubbed the Economic Opportunity Act, amounts to an overhaul of New Jersey's corporate incentives that aims to loosen the geographic limitations of previous programs, such as Urban Transit Hub; promote development of key industries; and place a greater focus on job creation.

The bill also calls for creating a new aviation district — namely, within a 1-mile radius around Atlantic City International Airport — in which businesses are eligible for "mega project" designations, said Ted Zangari, a Sills, Cummis & Gross attorney who helped craft the measure. The designation qualifies projects for even greater base awards, provided they have at least 1,000 new or existing jobs, or 250 jobs with a $20 million capital investment.

The proposals could help a sector that advocates feel is sometimes overlooked in the state's economic development policy.

Still, the defense and aerospace industries have found the spotlight recently: New Jersey is among 24 states that have applied to become federal testing sites for drones, or unmanned aircraft.

Lockheed Martin, the defense giant, has also grabbed headlines this year amid reports that it was pressing for quick passage of the incentives overhaul. At stake are a new defense contract and scores of jobs around its Moorestown plant, after the company secured a U.S. Navy assignment with the help of a $40 million tax credit last year.

Bolstering the state's defense industry would help companies like Sea Box, which recently produced 26 customized containers for Lockheed. The business also trickles down to companies such as Parts Life Inc., a Cinnaminson firm of about 20 that services and makes parts for defense and aerospace equipment. CEO Sam Thevanayagam said the six-year-old company has "unlimited potential to grow" because of the presence of companies such as Lockheed and Boeing, as well as the state's military bases.

"We have quick feet, because we need to be able to move and grow with what our customers need, what the market needs," Thevanayagam said.

Zangari, the real estate attorney, said the call to cluster New Jersey's defense industry becomes more urgent with the prospect that the military in 2015 will conduct another base realignment and closure nationwide, similar to the one that closed Fort Monmouth in 2011. He said "the best way to insulate ourselves from being on the chopping block" is to cluster as many defense contractors, create as many private-sector jobs and inspire as much capital investment as possible.

"We really should see this race against time until 2015 as our rallying cry to make sure we effect these defense-aerospace clusters — even more urgently than we were already looking to create them" for job creation, he said.

E-mail to: joshb@njbiz.com
On Twitter: @joshburdnj

Joshua Burd

Joshua Burd

Josh Burd covers real estate, economic development and sports and entertainment. Before joining NJBIZ in 2011, he spent four years as a metro reporter in Central Jersey. His email is joshb@njbiz.com and he is @JoshBurdNJ on Twitter.

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