Sally French, Social Media Editor at MarketWatch, highlights Grand Sky in an article explaining how the “Silicon Valley of drones” is growing in a place you probably wouldn’t expect.
(republished here from MarketWatch):
With the most open airspace in the nation, vast farmland, infrastructure to test on, and the nation’s first unmanned aircraft degree program, it makes sense that North Dakota would be the place where drone technology is expanding at an unprecedented rate.
The U.S. has historically been prohibitive in allowing companies to commercialize drones; murky rulings from the Federal Aviation Administration and haphazard enforcement of laws have made it challenging for drone companies to operate in the U.S. It’s so challenging, that many companies including Amazon Prime Air have expressed leaving the U.S. to work in other countries
But it’s a different story in North Dakota.
This summer, the nation’s first unmanned airport, the Grand Sky Development Park, opens at the state’s Grand Forks Air Force Base. The project, which has 1.2 million square feet of hangar, office, and data space, is being developed by Grand Sky Development Company. A runway will allow for traditional and vertical takeoffs by drones.
The airport is expected to generate about 3,000 jobs by its 2016 completion, including 1,000 permanent jobs on site, 1,000 jobs around the community and 1,000 jobs outside the state, said Tom Swoyer, the project’s developer. Pilots would be able to control drones launching at the site from anywhere in the world.
“It’s going to touch a lot of places,” Swoyer said. “A pilot could be in Southern California and pilot the plane launched from North Dakota.”
It’s an appealing proposition for companies like Northrop Grumman, which has signed as the site’s anchor tenant, but has its Aerospace Systems headquarters based in Redondo Beach, Calif.
North Dakota appropriated $5 million to help bring infrastructure to the site as part of its 2015-2017 executive budget and another $7.5 million in grant funding for runway improvements. With the project expected to cost about $25 million in total, the balance will be covered by private investment, said Swoyer.
“This project evolved here in North Dakota with the right combination of political will and an economy that was growing,” Swoyer said. “It’s a state that is investing in the industry. It’s a community willing to raise their hands and say, ‘let’s try something completely different.’”
A community ‘all focused on unmanned aviation’
In 2005, the Base Realignment and Closure Commission (BRAC) considered closing the Air Force base.
“Our performance and safety record in fighter aircraft was unprecedented, but despite that our aircraft were getting old and weren’t going to get replaced,” said Robert Becklund, then commander of the North Dakota Air National Guard.
To avoid a drastic action by BRAC, the base made a bold move — replacing its KC-135 Stratotankers with drones.
“This was a dramatic change going from a single seat manned fighter aircraft to unmanned aircraft,” Becklund said. “But it was the right thing to do for the nation.”
The base is now the site of the Global Hawk and MQ-1 Predator drone aircraft.
At about the same time, the University of North Dakota established the Center of Excellence for unmanned aircraft systems (UAS), offering the nation’s first undergraduate degree program in unmanned aviation. Five students received degrees in 2011, the program’s first graduating class. Today, more than 100 students are enrolled, and the program is one of more than 30 similar degree programs at universities throughout the country.
“We have academia, our military, the Department of Homeland Security, and industries in the region all focused on unmanned aviation,” Becklund said.
In 2014, North Dakota was one of six states allowed to develop a test site for commercial drone applications: the Northern Plains UAS Test Site in Grand Forks. The site is part of a FAA program looking toward the safe integration of unmanned aircraft into airspace.
North Dakota’s test site was the first to earn operational designation from the FAA, and the first to fly underneath the agreement. The site covers more than half the state, boasting 45,000 square miles of authorized airspace – the largest volume of any single state.
| Test Site | Participating states | Size (in square miles) |
| Pan-Pacific UAS Test Range Complex | Alaska, Hawaii, Kansas, Oregon and Tennessee | 663,300 |
| Northern Plains UAS Test Site | North Dakota | 45,000 |
| State of Nevada | Nevada | 30,000 |
| NUAIR Alliance | Massachusetts, Michigan and New York | 7,000 |
| Lone Star UAS Center of Excellence & Innovation | Texas | 6,000 |
| Mid-Atlantic Aviation Partnership | Maryland, New Jersey and Virginia | 2,700 |
| Source: University of Alaska Center for Economic Development, FAA | ||
“If North Dakota hadn’t been selected as a test site, I would have questioned our country’s decision making,” said Becklund, who now serves as the executive director of the test site.
The state budget allocated $4.2 million in its FY2015-17 budget for operating the test site. Of that, $1.2 million goes directly to drone companies in the form of a dollar for dollar matching program for those that opt to partner with one of North Dakota’s research universities on a project. A related, but separate program — Research North Dakota — provides up to $300,000 in matching funds for qualified firms.
But there’s a catch. For major companies to fly at the test site, they have to lease their unmanned aircraft to the site so that they can fly under public domain. That caveat is what may have driven companies like Amazon AMZN, +0.09% to explore drone delivery testing outside of the U.S.
“There is no way these companies will lease their airplanes to us,” Becklund said. “It’s a proprietary machine. Any company developing their own aircraft will not lease that to anyone outside their company.”
That restriction has posed a major problem for test sites trying to attract corporate research.
“The FAA says they are here to support industry, but to [participate at a test site], companies have to lease their aircraft to us,” Becklund said.
Companies could get around the requirement by applying for an experimental certification but that still restricts them to research — not commercial — applications.
A vibrant startup scene
Despite the challenges, other (often smaller) drone companies benefit from the test site.
Most of those companies are based in Fargo, a town entrepreneurs say bursts with energy akin to the startup scene in San Francisco. But this startup scene is dominated by drone-based industries.
“We’re becoming a robust startup community,” said North Dakota’s Lieutenant Governor Drew Wrigley. “They are the geek squad over in Fargo. You’ve got technical companies and young energetic entrepreneurs.”
Appareo Systems builds flight data recorders and ADS-B, a type of aircraft tracking system. Since 2001, the startup has worked on a project in partnership with NASA and the University of North Dakota to build, design and manufacture the ADS-B that equipped the airplanes.
Another company, Packet Digital, combines high speed power electronics with advancements in solar to double drone flight times. The ultimate goal is to provide drones with unlimited flight.
“Once you extend flight time, you open up the possibility of many more types of applications and uses for drones,” said Terri Zimmerman, Packet Digital’s CEO. Those applications could include agriculture, allowing farmers to fly over farmland to monitor crops.
And as more drones fill the airspace, there’s a company working on technology that gives pilots situational awareness of other drones in the area. Botlink allows operators to control a drone from a tablet and detect other drones flying nearby.
The company was founded by Shawn Muehler. He’s the guy behind DroneFocus, a meetup group in Fargo that grew to 50 members, including Becklund, local startups and public officials.
“We’re bringing the government, the private sector, the commercial side together to cut through the red tape,” Muehler said. “It’s the only meetup where we get every industry player in one room.”
The state’s lieutenant governor, Drew Wrigley, has been known to attend.
Indicative of the group’s attitude, the whole thing is organized through Meetup.com. That means anyone is welcome; you just have to click a button to join. When the group huddles, the gathering feels more like a neighborhood block party than a rigid policy meeting with a strict agenda, attendees say.
“We just have a different personality out here,” Muehler said. “It’s not about how we can beat our competitors. It’s how we can help each other out to propel this industry forward.”
North Dakota’s drone sector has already blown away industry predictions. The Association for Unmanned Vehicle Systems International (AUVSI) released an economic report in 2013 (before North Dakota was chosen as a test site) predicting the economic impact of drone integration in the U.S. The data was based on airspace activity at the time the report was created.
They forecast that between 2015 and 2017, California’s drone industry would have the largest economic impact in terms of dollars, and North Dakota would have the third lowest.
Predicted and revised data for drone economic impact (2015-2017)
| AUVSI’s California predictions (made in 2013) | AUVSI’s North Dakota predictions (made in 2013) | North Dakota predictions through 2016 (revised based on approval as a test site) | |
| Economic impact $(M) | $2.39 billion | $14 million | $59 million |
| Taxes ($M) | $13.64 million | $7,000 | N/A |
| Jobs Created | 12,292 | 71 | 242 |
| Jobs Created as percentage of total population | 0.031% | 0.009% | 0.039% |
| Source: AUVSI, North Dakota Department of Commerce | |||
North Dakota’s Department of Commerce revised those predictions in 2013 based on the assumption that the state would become a test site. Their data showed that North Dakota would have the greatest percentage of drone-related jobs (relative to population) of any state.
“Obviously, California has a number of aerospace companies as well as companies that develop sensors, payloads, software, and a variety of different products that fit within this industry,” said Paul Lucy, a director at the North Dakota Department of Commerce. “They underestimated the potential for companies to come here and do R&D work with our test site.”
Still, Becklund doesn’t believe North Dakota is complete replacement for Silicon Valley. There just aren’t enough people working in engineering and technology to fill jobs in a state that already has one of the nation’s lowest unemployment rates, he said. North Dakota’s unemployment rate in May was 3.1% versus the national average of 5.5%.
“But if those engineers who developed the technologies in Silicon Valley are looking for a place with a low cost of living, a highly educated workforce, and a cooperative community — whether that’s the government or financially — probably this is the best place to do that,” he said.
But even if the jobs get filled, there’s still the issue of funding.
“We can’t get funding because the people in the state tend to be fiscally conservative,” Botlink’s Muehler said. His company received $500,000 in seed funding from local investors. But that’s a paltry figure if the state is going to compete with Silicon Valley’s venture-backed drone startups like Airware, which has raised over $40 million in five funding rounds, or 3D Robotics, which has more than $100 million in venture capital.
“We’ve been searching for Series A on a local level because we want to keep the money in the state, so we’re looking for funding sources within North Dakota” said Muehler.
But where these startups lack private capital, the state is trying to foot the bill. Since 2006, North Dakota has allocated $32.5 million in grant funding for companies interested in commercial drone development through 2017. In addition, the state’s Research North Dakota program offers $5 million biannually in grants from research and development to organizations and companies involved in UAS research through state universities.
Those business incentives have drawn companies from around the U.S. to the state. Florida-based drone manufacturer, Altvavian, announced in February a $3.2 million agreement to manufacture drones at a plant in North Dakota, the first official UAS manufacturing project in the state.
North Dakota’s Lieutenant Governor Drew Wrigley says he sees his state as the nation’s next Silicon Valley for drones.
“People look to North Dakota and say they want to emulate this,” he said. “We’re blessed with the natural conditions that make it easy to expand drone technology, industries that are keen to tie in UAS technology and on top of that you have people passionate for aviation and emerging technologies. It’s a part of our pioneering culture.”
