A Thriving Manufacturing Sector
The institution of the Chips and Science Act by the United States Government is a great milestone to create competitiveness in the domestic economy, spur innovation, and boost the country’s national security. As a key player in the semiconductor industry, Colorado Springs’s Advanced Manufacturing and Semiconductor Technology sector is on a new path to revitalizing Research & Development (R&D) and commercialization of leading-edge technology, including quantum computing, AI, clean energy, and nanotechnology.
Dubbed Silicon Mountain, Colorado Springs is one of the fastest-growing tech hubs in the nation. The city’s lower cost of living has seen many tech companies and startups expand to the region to take advantage of Colorado Springs’ business-friendly environment, skilled workforce, and strong economy.
In 2022, Zivaro, an information technology company that specializes in serving government and national defense partners, announced its expansion to Colorado Springs, creating over 300 new jobs at an annual average wage of $165,076. During the same period, Microchip Technology, a semiconductor manufacturer, announced an $880 Million planned investment in the region, creating more than 400 well-paying jobs and $1.4 billion in capital investment. Colorado Springs also has a well-developed infrastructure, with a robust fiber-optic network, providing high-speed internet access to businesses across the city.
Revitalizing the Semiconductor Industry and Manufacturing
Colorado Springs has a large industry concentration of semiconductor and hardware and manufacturing activities presenting great opportunities for growth. In 2022, the Colorado Springs Semiconductor industry generated $1.6 billion for the city’s economy. The sector holds a 3.4% share of the region’s total GRP and represents 2.4% of the Gross National Product.
During the same year, the city’s Hardware and Manufacturing industry contributed $0.2 billion in total GDP to the local economy and holds a 0.5% share of total GDP. With a labor pool of over 140,000, the industry is projected to grow by 5.4% in the next 5 years.
Hardware and manufacturing companies in Colorado Springs enjoy a quality supply and a growing labor pool from the region’s post-secondary institutions, which produce a strong pipeline of industry-related degrees. Industry investors also have access to a relatively lower tax compared to the national average, state and local incentives, and regional support that contributes to a healthy business environment for growth and prosperity.
The Chips & Science Act has played an important role in reshoring manufacturing jobs back to the U.S. and creating dependable supply chains. In taking advantage of the Chips & Science Act, Entegris, a global supplier of electronic materials that support the semiconductor and high-tech industries, announced its expansion to Colorado Springs to invest $600 million on its manufacturing center of excellence, creating 600 jobs in the local economy.
A report by McKinsey & Company shows that the US Economy declined by about a quarter-trillion dollars in 2021, due to the shortage of semiconductors. Semiconductors are key to economic development and prosperity in the digital age. They form part of the United States’ top five exports, totaling $193 billion in 2019.
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Making Investments Go Further
Commercial Aeronautical Zone
Aeronautical businesses can realize significant incentives within the Commercial Aeronautical Zone at the Colorado Springs Airport. All local sales and use taxes, with some exemptions, are abated for companies operating within the zone.
Pikes Peak Enterprise Zone
Tax credits are available to businesses operating in the Pikes Peak Enterprise Zone.
Manufacturing and Mining Equipment: State and county sales tax exemptions for purchases of manufacturing machinery or machine tools and parts.
Investment: 3% Colorado income tax credit for investments in equipment used in the zone for at least one year.
Job Growth: $1,100 Colorado income tax credit for each new job created above the maximum number employed in the prior tax year.
Employer-Sponsored Health Insurance: Two-year credit of $1,000 ($2,000 total) for each employee insured under an employer-sponsored health insurance program.
Research & Development: 3% of R&D expenditures above and beyond the average of the last two years’ R&D expenditures.
Rehabilitation of Vacant Buildings: 25% credit or rehabilitation costs (up to $50,000) to update buildings at least 20 years old and vacant for two years.
Job Training: 12% credit of the training investment in a job training program conducted on site or off site to improve employee skills.
Sales Tax Exemptions
Standard incentives apply to construction materials, business personal property, and large purchases of manufacturing equipment.
Colorado Sales & Use Tax Exemption on Aircraft and Aircraft Parts
Aircraft used in interstate commerce by a commercial airline and parts permanently affixed to aircraft are exempt from state sales and use tax. Included are fuselage parts, parts for aircraft engines, seats permanently affixed to the aircraft, aircraft paint and other materials.
Aviation Development Zone Tax Credit
The Colorado Springs Airport is a state-recognized Aviation Development Zone. Businesses within this zone, and involved in aircraft manufacturing or maintenance, may qualify for a state income tax credit of $1,200 per net new full-time employee.
A Force to be Reckoned With
Top-notch educational institutions strengthen Colorado Springs’ job training and upskilling initiatives, ensuring the region’s 11,600-plus manufacturing workforce continues to innovate to the next breakthrough.
Pikes Peak State College and the University of Colorado Colorado Springs both offer extensive engineering courses, certificates, and degrees in basic manufacturing, advanced manufacturing, machining, robotics and automation. Technology is woven throughout education in Colorado Springs, a city known for its tech-savvy talent.
The MiLL in Colorado Springs empowers the next generation of industry leaders. MiLL, short for Manufacturing Industry Learning Lab, is an initiative between school districts, professionals, and industry partners. High school, college, military, and industry individuals learn lean manufacturing using the latest woods technology and an industry-education driven curriculum. Partners include MICRO JIG, Kreg, and Stiles.
Transitioning and veteran military represent more than a large percentage of residents; they are also one of the unique drivers behind the Colorado Springs workforce. About 84,000 veterans reside in the area, with an average of 400-plus military separations per month. Many choose to stay and pursue second careers in Colorado Springs, while those stationed at local installations in the past often return. Both contribute unique characteristics – disciplined, skilled, and a strong work ethic.