Airport activity directly linked to metro area economies

Industrial Park braces for comeback

JAMES CHILTON/Miner<br><br>
One of the few businesses that has actually benefited from the recession, Kingman Airline Services, performs maintenance on the more than 60 planes now grounded at the Kingman Airport. In contrast to previous years, many of the planes new at the airport are larger airliners that could be put back into circulation at a moment’s notice.

JAMES CHILTON/Miner<br><br> One of the few businesses that has actually benefited from the recession, Kingman Airline Services, performs maintenance on the more than 60 planes now grounded at the Kingman Airport. In contrast to previous years, many of the planes new at the airport are larger airliners that could be put back into circulation at a moment’s notice.

KINGMAN - Visible signs of the recession have been showing up everywhere, whether it's in the abandoned shell of the local Whataburger or the liquidation signs plastering the Office Depot just a few hundred yards away.

But the Kingman Airport Industrial Park, which boasts the largest concentration of employees in the community, has continued to weather the storm, and may even be braced for a comeback by year's end.

Robert Riley is the director of economic development for the Kingman Airport Authority. He said that as the recession has gained steam over the past six months, he began noticing an appreciable drop in the number of cars parked outside several of his tenants' buildings.

"We know there have been some layoffs or losses through attrition," Riley said. "The industries out here that deal directly with the consumer are probably the most affected."

Riley said the economy of the Industrial Park is very closely tied with the economy of southern California and, to a lesser degree, the economies of Phoenix, Tucson and Las Vegas, all of which have been hit hard by the downturn. Many of the companies in the Industrial Park manufacture goods for "just-in-time" delivery, meaning they are shipped by truck directly to stores in those cities, rather than sent to a warehouse or distribution center.

Tenants feel pain

Riley said the high cost of gas last summer did raise shipping costs, but it actually had little effect on the Industrial Park's business. It wasn't until later in the year, when credit markets tightened dramatically and consumers suddenly curtailed their spending, that Industrial Park tenants began feeling the pain.

"The slowdown occurs when consumers stop buying. They started to quit buying about six months ago, and it got really bad three months ago," Riley said. "Where the industries are affected now is, they bought their raw materials at high prices and high shipping costs. Now, costs have come down, and they have to sell their goods at a lower rate, so businesses are losing money."

Even so, Riley said, rumors of an economic Armageddon at the Industrial Park have been greatly exaggerated. While it's true some layoffs have occurred, Riley estimates the vast bulk of the park's regular compliment of 2,400 employees are still working there - albeit at reduced hours in some shops.

"I have the feeling we're down to around 2,000 to 2,100 right now," Riley said. "I think we're pretty much going to be flat for a while."

Despite the recession, Riley noted that Kingman's proximity to road, rail and air shipping routes is still attracting new tenants to the park. Recent additions include Contech Construction Products and Telling Industries, which both joined the park in 2008.

"We still have new companies that are looking at the area," Riley said. "Our requests for information are obviously not what they were a year ago - those are way down - but there's still activity.

"I'd like to say I'm a great salesman," Riley added. "But our best salesman is (mapmaker) Rand McNally."

Riley also noted the stability among most of the Industrial Park's tenants. He said of more than 4 million square feet of developed space in the park, only about 180,000 remains vacant.

"That's still less than a 2 percent vacancy rate, though for us that's a huge number - we'd been running at a 99 percent occupancy rate for years," Riley said. "There's not a lot of turnover. For the most part, our model is very, very consistent and very good."

While some of the vacant space has come from tenants pulling out, Riley said much of it is also the result of new tenants deliberately building larger than they need, in hopes of eventually leasing out some of the extra space.

Lull has benefits

With business slowing, Riley said many of the park's affected businesses have been taking advantage of the lull to do large-scale maintenance operations they could not otherwise perform during more active times, pointing to Guardian Fiberglass's high-profile overhaul in January as a perfect example. This, he said, indicated that many Industrial Park tenants believe it is only a matter of time before business picks up again - and they want to be prepared for when it does.

"The key to today's economy is redefining our customer and being prepared for when business rebounds," Riley said. "We're still concerned, we're still affected by the economy overall, but the southwest is still a vibrant economy. I'd hate to be in Detroit right now."

Not all the park's businesses have been hurt by the recession. One tenant, Kingman Airline Services, has actually benefited from the ailing airline industry, doing a brisk business repairing and maintaining the roughly 60 airplanes now grounded at the airport. While most planes kept at the airport are typically smaller, single-engine models or older planes already stripped of their vital components, in recent months many larger airliners have been parked by investors who have taken them out of regular service in response to declining air travel.

"The airlines are assessing their service and eliminating non-profitable routes," Riley said. "We've had more aircraft here in the past, but they were mostly small, regional, 15-passenger planes. These are 50-passenger planes."

In general, Riley said, the Industrial Park is experiencing a substantial correction from the exuberant boom of the mid 2000s, and while the correction has been painful, he remains confident that the park will survive, as it has for more than 30 years.

"We had a very good year a year-and-a-half ago, and we'll average it out this year," he said. "We should see things pick up by the end of the summer. If we can keep our costs down to the consumers, they should be more aggressive.

"I'll be unemployed before anyone here shuts down," Riley added. "My position is far less important than some of these basic manufacturers."