The Colorado Chamber Foundation and the Colorado Space Coalition have issued warnings to state leaders this summer: Colorado’s aerospace and defense industry, a significant economic driver for the state, is at risk of falling behind other states. These organizations assert that while the industry has been a consistent bright spot in Colorado’s economy, its future competitiveness is threatened by weaknesses in its supply chain and a regulatory environment that is slowing business growth.
This vital sector supports more than 61,000 jobs in Colorado and contributes $14 billion to the state’s gross domestic product, according to a report by the Colorado Chamber Foundation, prepared with consulting agency Economic Leadership. Despite this, the Foundation’s report indicates that job growth in the sector has flattened, and other states are “pursuing the same opportunities more aggressively than Colorado,” which is starting to affect the industry.
Rachel Beck, executive director of the Colorado Chamber Foundation, stated in a news release that Colorado has developed one of the country's most comprehensive aerospace and defense ecosystems. She emphasized that while this provides an extraordinary opportunity, the state's leadership “cannot be taken for granted,” and proactive measures are needed.
Colorado has established itself as a hub for research, manufacturing, and satellite operations, particularly along the Front Range. This positioning is attributed to its central location, higher elevation, and a concentration of major research institutions and military bases. The state hosts large campuses for major defense contractors like Lockheed Martin and BAE Systems, which acquired Broomfield-based Ball Aerospace. Several Colorado-based startups, including York Space Systems, Voyager Technologies, and soon Ursa Major, have also grown into billion-dollar public companies.
However, the competitive landscape is shifting. During the 2010s, Colorado benefited from lower operating costs and a surge in net migration compared to coastal hubs such as California, Florida, Texas, and Washington. This decade, the state has seen a decline in these rankings.
The Colorado Chamber Foundation provided 18 recommendations for state leaders. These include improving marketing for the industry, increasing engagement from the governor’s office, streamlining permitting processes, expanding state incentive packages for defense companies, boosting job training programs, and addressing the state's high cost of living to retain its skilled workforce.
Separately, the Colorado Space Coalition, an organization operating under the Metro Denver Economic Development Corporation, released a preliminary study with McKinsey & Company in July. This study revealed that competitor states such as Virginia, Florida, Oklahoma, and Texas are expanding their aerospace industries faster than Colorado.
Parker White, director of the Colorado Competitive Council, explained that shifts in federal government contracting strategies have led to more opportunities for smaller and midsize companies, which are now winning contracts traditionally awarded to large defense contractors. There has also been a rise in private investment, leading to the creation of new “unicorn” companies that are changing the industry's major players. White noted that “the landscape of the business ecosystem is shifting” due to these new companies and business models.
The Colorado Space Coalition's study highlighted that industry growth is more rapid in states with more business-friendly environments. These states, White elaborated, offer significant advantages in terms of business friendliness and the ability to expand at relatively lower costs compared to Colorado. The study also emphasized the need for Colorado to invest in closing gaps in its supply chain.
White pointed out that Colorado-based companies are winning contracts but are often fulfilling these deals by subcontracting services outside of the state. While Colorado excels in the upper-mid tier of the supply chain, which includes software engineering, assembly, and developing space systems, its landlocked geography prevents competition in rocket launches.
However, White stressed that Colorado could significantly strengthen its position by addressing gaps in the earliest stages of the supply chain, such as raw material extraction and manufacturing. He argued that filling these gaps is crucial regardless of the state's business policies because “those downstream suppliers will always have a place.” The Colorado Chamber Foundation’s report supports this, noting that despite a high concentration of aerospace workers, manufacturing within the aerospace industry is the lowest among all industries for Colorado, “limiting growth.”
While both reports acknowledge Colorado's high ranking for its talent pool, developed by its concentrated ecosystem and leading universities, attracting and retaining this talent is becoming more difficult. Matt Magaña, president of space, defense, and national security at Voyager, reported that demand in the aerospace sector is “skyrocketing,” making it harder to find labor to meet this demand. He cited Voyager's own growth, with second-quarter earnings of $52.7 million, up 51% from the first quarter.
Magaña compared Colorado's situation to Southern California, a “mecca” of aerospace engineers that still struggles to attract enough talent to meet demand, stating, “To keep pace with feeding all of those companies with high-end talent is a pretty tall ask.” Both reports recommend that Colorado improve its high cost of living to ensure it can retain its existing workforce and attract new workers.
State leaders have already had to use tax incentives to prevent several Colorado space companies from relocating their expansions to other states. The Colorado Economic Development Commission awarded Berthoud-based Ursa Major $35 million in job growth tax incentives and $23 million in CHIPS refundable tax credits. These incentives are contingent on the company creating 1,850 new jobs in Colorado within eight years. Denver-based Voyager Technologies received $920,000 from the commission to encourage it to expand its headquarters in Colorado rather than in states like California, Alabama, or Arizona. Additionally, an unnamed aerospace company planning to expand in Douglas County was granted $26 million in tax incentives.
Ellie Reynolds, president and CEO of Douglas County EDC, stated in April that as Colorado has become “less business-friendly,” her organization aims to be a “North Star in the business community, saying we’re open for business.”