Branstad's 'Operation Thank You' begins at Rockwell Collins

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Rockwell Collins CEO Clay Jones warned of potential job cuts due to federal budget and legislative inaction Wednesday during the first of Gov. Terry Branstad's statewide stops to show gratitude for existing employers.

A Rockwell Collins stop Wednesday morning kicked off the Branstad administration's "Operation Thank You" campaign to foster relations with long-term growth companies in Iowa. Such companies are often overlooked in a desire to call attention to success in luring new companies, Branstad said, but create the vast majority of new jobs in the state.

The Cedar Rapids-based company designs and manufactures aerospace electronics and provides related services such as flight training and flight planning and support services. It employs 6,500 in the Cedar Rapids-Iowa City area and 10,000 statewide, including about 4,000 engineers in the Cedar Rapids area.

Rockwell Collins' concerns have much less to do with the state than the federal government these days, however. Jones voiced concern about the "devastating $500 billion threat of sequestration" cuts in military spending slated to begin Jan. 1, 2013 due to Congress' inability to agree on targeted budget cuts.

THe sequestration cuts will impact jobs "in our industry, in our state and in our community," said Jones, who is also Rockwell Collins' president and board chairman.

Rockwell Collins spends much of its $1 billion in annual research and development spending in Iowa because of its R & D tax policy and "stable and consistent" corporate income tax policy, Jones said.

The federal government has been less supportive, Jones said. Congress has made 14 temporary extensions of a federal corporate R & D tax credit and allowed it to expire twice in the last three years, he complained.

"As a result we don't have the certainty and consistency we need to do business and that has inhibited us from adding more jobs in Iowa," Jones said.

Rockwell Collins has been one of Iowa's best technology-based business success stories with a long history of growth. That growth has been interrupted recently by a series of layoff announcement resulting mainly from defense program cutbacks. Only a fraction of the layoffs have been in Cedar Rapids, but the worst could be yet to come.

Rockwell Collins was cited by Branstad and Iowa Economic Development Authority Director Debi Durham as a "traded cluster company" valued highly in the state's economic development effort because it innovates new products and ships them globally.

Rockwell Collins has been in the cross hairs of criticism of the state's Research Activities Credit. Reports from the Iowa Fiscal Partnership have said the credit was originally designed to help early stage and startup companies, but now are used mainly by large established corporations with little reporting required to show that they produce jobs or other benefits for the state.

The group's latest report said Rockwell Collins was the largest recipient of the credit, allowed $14.3 million in refundable tax creditsin 2011.

Companies like Rockwell Collins also benefits from state tax laws that exempt Iowa manufacturers from paying state sales tax on product that is shipped for sale to customers out of state.

Branstad said a new law his administration is supporting will extend the benefits to suppliers of eliminating state sales tax on goods being manufactured for products to be sold out of state.

The company has a supplier base of about 800 companies in Iowa, Jones said.

Branstad's visit to Rockwell Collins included a brief factory tour and a look at the company's latest touchscreen cockpit avionics, flight information solutions, and flight simulators.

More than 100 Rockwell Collins employees were on hand to hear Branstad, Durham and Lt. Gov. Kim Reynolds. They were joined by leaders of the Cedar Rapids Metro Economic Alliance and the city.