JUNEAU, Alaska (AP) — When most people think of Alaska, they picture its thick forests, hulking grizzly bears and soaring, snow-covered peaks.

What they might not imagine is rockets whisking defense and other payloads into space. But America's northernmost state has that too, entering the high-tech aerospace business more than 25 years ago as it looked to diversify its oil-reliant economy.

The state-owned Alaska Aerospace Corp. hit a low point after a rocket exploded at its launch site in 2014 amid a deepening state deficit. The governor later gave it an ultimatum: Become self-sustaining or sh...