April 17, 2023

Weeks after a Chinese surveillance balloon and three additional balloons were shot down, Jim Nelson’s phone is still ringing.

“We got a lot of positive attention from that,” said Nelson, president of Aerostar International LLC, formerly the Aerostar division of Raven Industries.

Most of the calls started with: “Was that you?”

None of them were, but the attention on usage for balloons opened a door for educating about Aerostar’s capabilities, which include the design, manufacture, integration and operation of persistent stratospheric platforms and radar systems.

“That’s the exact kind of thing one could do with a stratospheric balloon … and we spend a lot of time on the (Capitol) Hill talking … about what systems we have, so that’s been a very positive move.”

For some, it offered validation for supporting Aerostar’s multiple relationships with government agencies. Others, unaware of the company in Sioux Falls, got some education.

“Why isn’t the U.S. doing that?” Nelson said he was asked.

“Well, we are,” he replied.

For decades, Aerostar’s technology formed the foundation of what became Sioux Falls-based Raven Industries. The company’s sale to CNH Industrial in late 2021 temporarily paused some of Aerostar’s government-related work, given the parent company’s international ownership.

With its own acquisition by Maryland-based TCOM Holdings last year, the company was repositioned for growth. A solid backlog meant 2023 began “in a really strong fashion,” Nelson said.

TCOM promotes itself as a global leader in intelligence, surveillance and reconnaissance.

“There’s real potential for a marriage of technology where we bring two unique capabilities together that could be a game-changer for defense and civil and commercial applications,” Nelson said.

Aerostar also continues to be based in Sioux Falls, where the company leases an office headquarters in the southwest part of the city that formerly was Colorado Technical University. It recently signed a lease at The Docks, a new 52-acre industrial development a half-mile southwest of Foundation Park near Interstate 90 and Marion Road.

That 78,000-square-foot space will allow Aerostar to replace space it had shared with Raven and to build out its unique technical requirements.

“It had the size, the location was great with having access to the interstate, we can get heavy trucks in there, but then the ability to expand with that campus (was key),” Nelson said. “We have a piece of the building, but … if business takes off, there’s ability to expand there.”

Andi Anderson and Rob Fagnan of Bender Commercial Real Estate Services helped put the deal together.

“We looked at all existing properties and several different build-to-suit opportunities … to make sure it was the right fit,” Anderson said. “They’re a great group to work with … and at the end of the day, this is what came to fruition.”

The deal reflects the market’s need for spec, or ready-to-go, industrial space, which previously had been all but nonexistent, Fagnan said.

“This is something you can come in and design exactly the way you want as a tenant, so that was very favorable for them,” he said. “The developers already had the financing in place and had already contracted for the panels, whereas with build-to-suits you’re starting from scratch and kind of guessing on numbers.”

It also ensured the company would stay in Sioux Falls, which was “a pretty hard requirement” but still, “if we don’t have a place to be, we don’t have much of a choice, and we were near that,” Nelson said.

“With the transition, it’s really exciting to stay in Sioux Falls. Being with Raven, we’re so proud of that history. Raven was founded on doing stratospheric balloons, so we treat that with a lot of respect. We’re very proud of our history and really excited about our future.”

The plan is to move into The Docks later this year.

Additionally, Aerostar now leases a hangar near Hurley that it uses for balloon launches, transitioning away from the former Raven Innovation Campus near Baltic.

With the opening of the new facility, “we envision a positive return on the investment that we’ve made by fusing these two innovative entities. As the global leader in persistent surveillance of ISR (intelligence, surveillance and reconnaissance) aerostats, TCOM capabilities are significantly enhanced by Aerostar,” TCOM Holdings president and CEO Ron Bendlin said in a statement.

“It allows TCOM LP’s tethered aerostats along with Aerostar’s sophisticated sensors and stratospheric balloons to position us as a global competitor with our customers worldwide. The TCOM-Aerostar combination allows us to enhance the gathering of data from multiple integrated sensors and enable situational awareness via a consolidated communications apparatus. It means delivering surveillance mechanisms for C5ISR, maritime and border security, distant warning and acquisition, and force protection.”

Aerostar includes about 250 employees across locations in Sioux Falls and Madison, Texas and Washington, D.C. About 150 of them are in the Sioux Falls area, and hiring is being done for some positions still needed to support the growth and roles that previously had been centralized through Raven.

Currently, defense-related work is driving much of the growth, “and that really tracks with the posture of the U.S. military and the adversaries moving from the war on terror to the adversaries of China and Russia, so that change in military posture is exactly what our stratospheric balloons are for, and there’s been a strong push for that,” Nelson said.

“In addition to the defense work, in some of the civil (work), we have a lot of interest for experiments but also wildfire monitoring. We’ll be doing a campaign this summer with a NASA organization and the U.S. Forest Service to provide communication and imagery for supporting the wildfires.”

The company is hiring in both engineering and manufacturing to support the multiple product lines, “and so far, we’re running ahead of plan in both areas of our businesses,” Nelson said. “Things are really looking up. To the stratosphere.”

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