CBJ Editorial
The two biggest economic players in the Corridor are the University of Iowa and Collins Aerospace, formerly Rockwell Collins, now under parent company Raytheon Technologies.
As we’ve often said, their success begets the region’s success. That has been the case for at least the last two decades.
We’ve had a great run. But with the recent troubling financial news coming from both entities, we are wondering if that run is over. Our region could be due for a economic realignment if these two entities continue to face serious financial challenges due to the COVID-19 pandemic.
What happens to their thousands of employees, the communities in which they live, and the hundreds of businesses that depend on the economic activity they generate if the pandemic continues to stifle their revenue and markets?
In a university-wide email obtained by the CBJ, UI officials say that “with the semester ending and the university facing $70 million in losses due to the pandemic,” regular pay practices will resume May 18, with each college and unit “working to understand potential changes in enrollment and making decisions about future staffing needs based on projections.”
The UI and higher education in general may be facing an existential threat as students and families reconsider college enrollment options if they can’t be physically on campus.
The UI provides an annual report on its economic impact to the state. It is impressive. In the 2017-18 budget year, the UI added $6.5 billion in income to the Iowa economy, according to the report. That’s equal to 3.4% of the state’s GDP, or about 81,000 jobs.
“For perspective, the activities of UI and its students support one out of every 26 jobs in Iowa,” concludes the report. The UI employed 10,443 full- and part-time faculty and staff in the year studied – excluding hospital, clinic and research employees – amounting to a payroll of $988.3 million, according to a news report.
The longtime business model of Collins Aerospace as an independent company was a roughly 50-50 balance of commercial and military contracts. That has changed since the various mergers and acquisitions, and now it is closer to 75% commercial and 25% military.
That isn’t a great ratio with the stunning drop in air travel and the resulting decline in orders for aircraft and aerospace equipment.
Citing a worldwide downturn in the wake of COVID-19, Collins Aerospace parent Raytheon Technologies said its commercial and aftermarket sales of aerospace products is expected to be down about 50% for the remainder of its fiscal year, and it is pursuing $2 billion in cost reductions that could include further employee furloughs. “We’re trying to be judicious … (and to) keep as many jobs as we can,” CEO Greg Hayes said in an earnings call.
Times are difficult for businesses and organizations at all levels; however, Collins Aerospace and the UI are cornerstones of our economy. We encourage our legislators and local government leaders to listen to their needs and help them navigate this challenging period. CBJ
