What just happened between Jeff Bezos' Blue Origin and Alabama?

Alabama Gov. Kay Ivey and Blue Origin President Rob Meyerson lift an Alabama great seal in the Saturn V Hall at the U.S. Space & Rocket Center in Huntsville on June 26, 2017. Meyerson was there to promise Blue Origin will build its new rocket engine in Huntsville if it wins a key contract. (Lee Roop/lroop@al.com)

Alabama leaders from Gov. Kay Ivey and U.S. Sen. Richard Shelby down to the Huntsville City Council gathered Monday to cheer the news that Jeff Bezos' rocket company Blue Origin will build a rocket engine plant in Huntsville.

Hundreds of jobs, hundreds of millions of dollars in investment. That's what the crowd heard. But what's happening between Amazon founder Bezos and Alabama right now is more complicated than it appeared to the casual attendee.

"Blue Origin will build a 400,000-square-foot facility on 40 acres in Cummings Research Park," Gov. Ivey said. "Blue Origin will be investing $200 million to produce the BE-4 rocket engine which will supply the New Glenn orbital launch vehicle and hopefully (be) selected (for) the United Launch Alliance Vulcan rocket."

Blue Origin President Rob Meyerson followed Ivey to the podium to announce "the selection of Huntsville, Ala., as the location of Blue Origin's BE-4 rocket engine production factory."

But Meyerson also added a caveat.

"After signing a BE-4 production contract with United Launch Alliance, Blue Origin will build a state of the art, high-tech manufacturing facility at the Cummings Research Park here in Huntsville, Ala.," Meyerson said. He added, "Construction can begin following the signing of such a contract expected to be later this year."

Lucia Cape, senior vice president of the Huntsville-Madison County Chamber of Commerce, confirmed the link Monday afternoon. Blue Origin needs the new engine for its own New Glenn rocket, but the Alabama plant depends on Blue Origin getting the ULA engine contract.

"Yes, the ground breaking will follow a production contract with ULA, after down-select of the engine is made," Cape said. "There is not a set time for this decision."

Not the only one

But Blue Origin isn't the only competitor wanting to power ULA. Aerojet Rocketdyne also announced a new Huntsville rocket plant this year to consolidate some of its operations and to build its own entry in the ULA engine competition. Its engine is the AR-1.

Contacted Monday, ULA spokeswoman Jessica Rye said, "This is an on-going procurement and down-selection and we are not commenting at this time."

So, why a big public announcement for a plant Blue Origin won't build unless it wins a ULA contract it hasn't won? Why was a detailed package of state incentives totaling nearly $50 million released, along with details of Huntsville's own $6 million in incentives? There was even a movie welcoming Blue Origin as an heir to Wernher von Braun.

BLUE ORIGIN | Welcome to Rocket City, USA from Red Brick Strategies on Vimeo.

Huntsville officials said Tuesday that the announcement clarified for other cities competing for the Blue Origin plant that Bezos had decided. Huntsville had won.

"We won an extensive nationwide competition with Blue Origin, a highly sought after company with a great reputation in the aerospace industry, which happens to be owned by Jeff Bezos, who also owns Amazon and the Washington Post," Mayor Tommy Battle said Tuesday. "We are the chosen city. Now everyone knows, if it happens - it happens here."

As for the video, the city says it was produced by the chamber of commerce to help lure Blue Origin to the city, not to celebrate its arrival.

Also noted was the presence at the press conference of Shelby. The senator has helped ULA before, and his visible sign of support could be significant.

ULA uses an older engine called the RD-180 now to lift satellites, including important military assets, into orbit on its Atlas V rocket. That engine is built by a partnership of an American and Russian company, and Shelby has helped ULA fight off repeated attempts by some in Congress to ban the RD-180 as tensions have mounted with Russia. In that fight, ULA has needed and counted on Shelby, and Shelby has come through.

If ULA loses its Russian engine before it gets a substitute for its new rocket called the Vulcan, it stands to lose U.S. military satellite launches. That could seriously harm ULA's plant in Alabama and its 600 workers. As it stands, the substitute will be either the BE-4 or the AR-1.

What Shelby said

"I commend and respect Blue Origin for this announcement today, and they're on the right track," Shelby told the crowd Monday. "They're on the cutting edge of technology, tomorrow's propulsion, and I can think of no better place in the world than to build your business here and build that rocket here in Huntsville, Ala. We are about space, we are about business, and you're going do well here, and we're going to replace that Russian engine."

So, Blue Origin has put down a Huntsville bet, and Shelby seemed to publicly back it in Huntsville Monday. Aerojet Rocketdyne has also put down a Huntsville bet, but officials said Tuesday that ULA's plant is coming whether it gets the ULA deal or not.

Stay tuned to see what ULA does with two big aerospace suppliers and Alabama waiting for its decision.

Here are the details of the state's incentive package and the expected benefits of the plant, according to the Alabama Department of Commerce:

- Plant payroll: $633 million

- Cumulative net revenue to the state (net of incentives): $43 million

- Return on investment to state (net of incentives): 135 percent

- Alabama Industrial Development Training (AIDT) to employees valued by the state at $3 million.

- Tax credit based on the number of employees and their expected state income taxes as follows:

- Jobs Credit: Estimated value of $8,707,211 over 10 years

- Investment Credit: Estimated value of $30 million over 10 years.

- 20-year Property Tax Abatement: The state approved years 11-20, with an estimated value of $647,745.

- Reimbursement for eligible capital costs: $10 million

(Updated Tuesday at 1:45 p.m. CDT to update throughout)

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