Suffolk IDA offers tax breaks to persuade AAR Aircraft to choose Melville over Miami

Suffolk County is trying to persuade a business that repairs components of military and commercial airplanes to move to Melville instead of Miami, officials said.

The county’s Industrial Development Agency has granted preliminary approval for $977,505 in tax breaks over 15 years to AAR Aircraft Component Services. The aid would support the company’s proposed $12.4 million move from its longtime home in Garden City to a vacant office building on Maxess Road.

However, top executives of AAR Aircraft’s parent, AAR Corp. in Wood Dale, Illinois, near Chicago’s O’Hare International Airport, are looking to consolidate the Long Island operation with a sister operation in Miami.

“Our corporate officers in Chicago are very interested to see that we lower our fixed costs so that we can be more profitable,” said Lawrence Montreuil, local site leader for AAR Aircraft, referring to rent, taxes and utility expenses. “So, we’re trying to find every possible means to lower our fixed costs … to enable us to remain on Long Island and take advantage of the great skilled labor that we have here.”

He told the IDA board last month that AAR Aircraft would reap substantial savings by moving from 149,000 square feet at 747 Zeckendorf Blvd. in Garden City to 65,000 square feet at 75 Maxess Rd., which would undergo renovations to accommodate the repair of aircraft parts. 

The 170,000-square-foot Maxess Road building was once the headquarters of industrial supplies seller MSC Industrial Direct Co. until it had its employees work from home permanently starting in 2020 with the COVID-19 pandemic.

AAR Aircraft recently won a $113.1 million contract from the U.S. Army to fix 1,260 auxiliary power units for Black Hawk helicopters.

Montreuil said the contract, which runs through 2028, is one reason why the company plans to add eight people within the next two years to its workforce of 140. Employee salaries are about $80,000 per year, on average, according to the application for IDA tax breaks.

Among the workers, 72 are charged with taking apart aircraft equipment, fixing components, reassembling the equipment, and testing its functionality. Four inspectors then verify that the equipment is ready to be reinstalled in the aircraft. The Garden City plant is certified by the Federal Aviation Administration to make the repairs.

Institutional knowledge on Island

“We are concerned that if we move off the Island, we will lose a lot of that institutional knowledge from the people who have worked for us for a long time,” Montreuil said.

Robert Sopp, an executive vice president, agreed, saying the company has developed a good working relationship with its largest customer, the Army, over more than 40 years in Garden City. Employees fix component parts for F-16 fighter jets and CH-47 and UH-60 helicopters.

“We’re one of nine critical vendors for the Army,” he said.

Employees also work on parts for the cargo and passenger airplanes used by FedEx, United Parcel Service, Alaska Airlines and Southwest Airlines.

Kelly Murphy, the IDA’s acting executive director, said, “Any company that helps to sustain the aerospace sector, which is a legacy industry for Long Island, is certainly something worth considering by our board.”

The Maxess Road area is also being eyed by the Town of Huntington as part of a larger plan to bring housing, restaurants and shops to an area of the Route 110 business corridor that is dotted by empty office buildings. The town hopes to create a tree-lined, walkable “town center” along the four-lane roadway.

Whether AAR Aircraft will move to the area is uncertain.

“It is a flight risk for leaving Long Island,” said Daniel P. Deegan, the company’s real estate attorney, referring to the possibility of it relocating to Miami. “We’ve got to do whatever we can to keep companies like this with these high-paying jobs.”

Newsday contacted the parent company, where an official declined to comment on Tuesday.

AAR Corp., with shares traded on the New York Stock Exchange, reported a profit of $90.2 million for the year ended May 31, 2023, on sales of $2 billion. Besides Garden City and Miami, the company has more than 60 facilities around the globe and about 5,000 employees, according to securities filings.

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.