Jeff Bezos’ Blue Origin will build its next-generation BE-4 rocket engines in Huntsville, Alabama, bringing more than 340 manufacturing jobs and $200 million in capital investment. Washington state, the home of Blue Origin, was not even a finalist.
Jeff Bezos’ Blue Origin space company will build its next-generation BE-4 rocket engines in Huntsville, Alabama, bringing the prospect of more than 340 manufacturing jobs and $200 million in capital investment to that city.
Washington state, the home of Blue Origin, was not even a finalist in the state-versus-state competition to select a location, according to Brian Bonlender, director of Washington’s Department of Commerce.
“We were considered in the first or second round,” Bonlender said.
But when Gov. Jay Inslee met Jan. 12 with Blue Origin President Rob Meyerson and asked what Washington state might do to match upfront incentive offers from other states, he didn’t get very far.
“The response was that we weren’t even close enough to have that conversation,” Bonlender said.
Alabama is providing more than $50 million in incentives, and local governments plan their own inducements, officials there said.
“The incentive packages other states offered were a big determinant,” Bonlender said. “We were unable to come close to the types of offers they were getting from other states.”
Washington’s constitution bars the state from providing upfront money to private companies — either directly or indirectly, such as paying for construction of a facility — as an incentive to locate work here.
The state’s incentives for Boeing are delivered in the form of tax breaks, both rate reductions and tax credits, which mean Boeing pays the state less of its revenue, as opposed to being handed money.
Many economic-development partners contributed to the effort to successfully recruit Blue Origin to Alabama and the full extent of the incentive package is unclear.
The Alabama Department of Commerce said that the state offered an incentive package of more than $50 million, including a $30 million tax credit for investment and up to $10 million in reimbursements for eligible capital costs.
The local package by the city and county governments “awaits the final public-approval processes” in their council meetings next month, the Huntsville Chamber said.
That approval seems a mere formality as officials across Alabama cheered Huntsville’s selection.
Huntsville already is called “Rocket City” because it’s where the U.S. government after World War II established a home for the team of former Nazi rocket scientists led by Wernher von Braun that helped develop the U.S. space program and the Apollo missions that landed on the moon.
As a result, Huntsville is the location of NASA’s largest spacecraft-research facility, the Marshall Space Flight Center.
Dale Strong, commission chairman of Madison County, where Huntsville is located, said in a statement, “Jeff Bezos and Blue Origin will build on the legacy of the German rocket team and the Marshall Space Flight Center to power the growing commercial rocket business.”
Huntsville Mayor Tommy Battle said the city is “proud to be the nation’s propulsion center of excellence.”
And Alabama Gov. Kay Ivey commended Blue Origin “for choosing to make Alabama its home sweet home!”
The BE-4 engine was designed and is being prototyped and tested at Blue Origin’s headquarters in Kent, where the company has installed sophisticated, multimillion-dollar manufacturing equipment.
Fueled by liquid oxygen and liquefied natural gas, the engine produces 550,000 pounds of thrust. It is designed to power both the next-generation Vulcan rocket being developed by the United Launch Alliance — the joint venture between Boeing and Lockheed Martin — as well as the large, reusable New Glenn rockets that Blue Origin is developing for orbital spaceflight.
Two BE-4s would be used on the Vulcan booster rocket. New Glenn would use seven BE-4s on the reusable first stage, and a vacuum-optimized BE-4U on its second stage.
The engines are designed to be reused for about 25 missions.
The Vulcan rocket will compete against SpaceX for future launches of national security and NASA payloads. Aerojet Rocketdyne is also in the running to provide the engine for that rocket.
Aerojet is also building its contending rocket, the AR1, in Huntsville — which adds a potential political element to Blue Origin’s location decision.
Alabama’s powerful congressional delegation, led by U.S. Sen. Richard Shelby, will side with any company pursuing rocket development in the state. By choosing Huntsville, Blue Origin eliminates any possibility that Aerojet might have that leverage in the Vulcan competition.
The Huntsville Chamber announcement said that construction of the new facility at Cummings Research Park “can begin once an engine production contract with United Launch Alliance is awarded.”
The engine selected for Vulcan will replace the current Russian RD-180 rocket engines used by NASA. Congress has passed legislation requiring NASA to end the use of the Russian engines by 2022.
On a tour of Blue Origin’s Kent facility in March 16, Bezos said that plant can build about a dozen BE-4 engines per year and that the company was actively searching for a site to build a larger BE-4 plant to ramp up production.
“It’s possible it could be here,” Bezos said then. “It could be any number of places.”
Bezos said at the time that there would be two main priorities in selecting the location to manufacture the engine.
Most Read Business Stories
The first was that the site must have “a talented workforce, so that you really can hire people who understand the quality demands of aerospace.”
The second consideration, Bezos said, is that “you want to go someplace that’s welcoming, that actively wants the company.”
On the sidelines of that tour, Blue Origin general counsel Robert Millman said a “crucial” component of Washington state’s bid was to pass legislation that extended the aerospace tax credits to space companies.
State Commerce chief Bonlender said that in private meetings, Blue Origin officials made clear they saw a B&O tax reduction and a research-and-development tax credit as big priorities.
In Bezos’ day job, as chief executive of Amazon, he’s keenly chased state tax breaks as the online retailer expanded warehouses around the country.
Such legislation for space companies still hasn’t passed in Olympia.
“It hasn’t been resolved yet. It was in the governor’s budget,” Bonlender said. “But this decision was made before resolution of those issues.”
Bonlender said that although the state had hoped to get the engine-manufacturing plant, Blue Origin remains a strong presence here. Most of its 600-plus employees do the engineering design and research work in Kent.
“They’ll be expanding in Washington state regardless,” Bonlender said.
Last year, Bezos was asked what he’d do with all the manufacturing equipment in Kent if mass production of the BE-4 went elsewhere.
“We have time to figure that out,” he responded. “My guess is, we’ll keep using it.”
In addition to building at least some production engines, the Kent facility will be used to refine the design.
“You are never done,” Bezos said, “We’ll work on a version 2 and 3 and 4.”
Yet on Monday, it was Alabama celebrating.
Greg Canfield, Bonlender’s counterpart at the Alabama Department of Commerce, in a statement said Blue Origin’s decision reinforces Huntsville’s role as “ the cradle of the nation’s rocket program.”
“Huntsville is a hub of innovation in every facet of aerospace, making it the perfect home for this Blue Origin facility,” Canfield said.