Incentive Spurs Lockheed Martin to Diversify

For 38 years, Lockheed Martin manufactured external tanks for NASA’s Space Shuttle program at the Michoud Assembly Facility in New Orleans. As the program wound down, the global aerospace and defense contractor explored ways to apply its NASA experience in new orleans to new private sector opportunities in Louisiana.

The transition demanded considerable research and development work, but a new Louisiana business incentive played a key role in convincing Lockheed Martin it could convert its NASA external tank work to a rapidly emerging market: the construction of large storage tanks for the LNG, or liquefied natural gas, market.

Expanding production of natural gas from shale reserves across North America had placed the Gulf Coast at the epicenter of LNG import and export operations. Lockheed Martin closely examined sites in Texas and Florida, but a competitive new incentive helped swing the project pendulum to Louisiana.

Lockheed Martin needed to curb operating costs where possible on the new venture, which made Louisiana’s Competitive Projects Payroll Incentive (CPPI) Program, created in 2012, a significant advantage. The program offers a rebate on an eligible company’s new payroll for up to 10 years. The company also becomes eligible for either a rebate of state sales taxes on construction materials or a 1.5 percent capital expense rebate. In addition to accessing Louisiana’s dynamic infrastructure and logistics, and the state’s skilled manufacturing workforce, Lockheed Martin will gain a 12 percent annual payroll credit for up to 1,000 employees hired for the new work at Michoud. There, the company will build LNG storage tanks and develop other innovative product applications.

“Louisiana Economic Development’s CPPI Program was one of the many factors that helped make Louisiana an advantageous state for our liquefied natural gas tank production business,” said Julie Dow, manager of economic development for Lockheed Martin. “Another important factor to mention is the Michoud Assembly Facility’s unique advantages and our history of building tanks there with similar cryogenic requirements.”

Today, Lockheed Martin is under contract to produce cryogenic LNG storage tanks for Wärtsilä, a Finnish power solution provider, and Harvey Gulf International Marine LLC, a marine transportation company. Lockheed Martin custom-manufactures tanks of different sizes and materials and is currently manufacturing both marine-based LNG tanks for offshore supply vessels and land-based tanks. During the initial launch phase of the facility, 166 jobs are being created and that number could expand as the venture continues to grow.

“This project has been a great endeavor and a beneficial partnership for our company,” said Dr. Rob Smith, vice president of Space & Cyber programs for Lockheed Martin Information Systems & Global Solutions. “The first line of orders is filled through most of next year and we are very happy with where we are on the project. This success provides us the ability to explore additional projects in the future.”