By Ed Lowe
Post-Crescent staff writer
GREENVILLE – The jets built by Gulfstream Aerospace Corp. arrive here “green” – bare-boned shells decked in primer the shade of pea soup.
When they leave, they are the sleek, fast, meticulously appointed tools for firms bent on being, like their jets, the best of their breed.
These days, however, Gulfstream is stressing its products’ function over form in the aftermath of spectacular business failures by some of its industry’s well-known customers.
Some of the failures – and the resulting public outrage over symbols of corporate malfeasance – have put domestic builders of business aircraft in a bind.
All are struggling with sales declines due, in large part, to frozen credit lines and the hobbled global economy. But it’s the new weight of the “image issue” facing the industry that confounds Greg Laabs, general manager of the Gulfstream operations at Outagamie County Regional Airport.
“General aviation provides 1.2 million highly skilled, high-paying American jobs,” Laabs said. “As an industry, we’re not used to having to sell the idea that airplane manufacturing is good for the economy.”
That’s part of the new cost of doing business amid the public castigation of firms that are asking for taxpayer bailouts. It arose after the CEOs of the Big Three automakers flew luxurious corporate jets into Washington, D.C., to seek federal dollars.
The national media reported their flight arrangements, promptly leading to a national skewering of the auto executives, two since departed, as mindless fat cats. Business aircraft makers, by association, became collateral damage.
“There’s a delicious irony in seeing private luxury jets flying into D.C. and people coming off of them with tin cups in their hand,” Rep. Gary Ackerman, D-N.Y., said Nov. 19, dressing down the trio of CEOs at a congressional hearing.
In January, the Obama administration pressured Troubled Asset Relief Program recipient Citigroup to cancel delivery of a corporate jet it ordered before accepting the taxpayer funds.
Citigroup “should know better,” Obama said.
Greenville Town Chairman Randy Leiker, echoing the view of the general aviation industry, contends Washington, in its zeal to score points by dressing down bailout recipients, left a successful American-dominated manufacturing industry twisting in the wind.
“It is very easy these days to use inflammatory phrases like ‘big-wigs and their fancy corporate jets’,” Leiker wrote in a July 3 letter to President Barack Obama.
“Certainly, as President, you understand. É Is it possible to be elected to national office today without private jet travel?”
Car trouble, plane trouble
Gulfstream, a subsidiary of General Dynamics Corp., is a key economic driver for the region, employing 700 highly skilled employees with annual salaries averaging $62,000 at its base near Appleton.
The. Savannah, Ga.-based Gulfstream employed 790 here as recently as the beginning of the year, but cut 1,400 jobs this year companywide, reducing its total payroll to roughly 9,000, said Heidi Fedak, its communications manager.
It also announced furloughs of a month or more affecting a total of 2,200 production workers in Savannah. The moves followed a dive in orders for new aircraft and sharply reduced demand for maintenance of existing jets, which are spending less time aloft.
The Gulfstream whose product line features jets set for delivery this year at starting prices ranging from $15 million to $49 million, delivered a record 156 jets last year.
It will deliver 97 this year, Fedak said, a decline of nearly 38 percent.
The company doesn’t get much sympathy from Washington for its plight. The business aviation industry was able to fight off a provision would have required TARP recipients to eliminate all corporate aircraft, but not before the reinforcing the public image of business planes as essentially bad business.
By the start of this year, healthy companies were canceling orders for aircraft; others dumped those they owned, flooding the market with used corporate planes.
Laabs, manager of Gulfstream’s sole major productions site in a cold-weather locale, said the economy alone can’t explain the drop in sales since the Big Three’s jets ignited a populist firestorm. Lately, successful firms that consider planes essential to their success aren’t buying them.
“The media is a big part of the problem.” Laabs said. “People are afraid to buy a business jet out of concern that some individual will use that to give them a black eye.”
First-quarter shipments of business jets fell 36 percent year to year, the General Aviation Manufacturers Association reported.
The trade association, and its counterpart, the National Business Aviation Association, responded to the image with No Plane No Gain, a public campaign touting the value of private aircraft to businesses, communities, and the national economy, and confronting the fat-cat stereotype of corporate jet users.
Cessna Aircraft Co., a Gulfstream competitor that cut more than 4,600 employees this year, tried a different tack, launching a national ad campaign challenging its customers to show some spine.
“Pity the poor executive who blinks,” Cessna’s ads said. “True visionaries will continue to fly.”
They may be doing less of it on private jets, however. FlightAware, a Houston-based tracking service, reported non-commercial jet operations during June were down 21 percent from June of last year, while all general aviation activity fell 8.5 percent.
Meanwhile, GM plans to shed its fleet of seven Gulfstream craft, the Washington Post reported. Chrysler is doing the same.
Made in the USA
Fedak, the Gulfstream spokeswoman, flew coach from Atlanta to the Fox Cities last week to lead a Post-Crescent reporter and photographer on a tour of the local Gulfstream and General Dynamics Aviation Services operations.
The flight took about 8½ hours out of her day, she said. Once aboard the commercial airliner, she had no opportunity to complete work related to her job, which requires privacy because she’s often dealing with proprietary information.
“But I can tell you what the people on either side of me were working on during the entire flight,” she said.
But if a flight was needed for critical, or urgent corporate business – final preparations for a key appearance before Congress by the firm’s CEO, for example – the use of private jet would have been “absolutely appropriate,” she said.
“These aircraft are mobile offices,” she said. “They provide an environment where (top officers and staff) can work together, so you can get as much done as possible in a short amount of time.”
Gulfstream doesn’t name its customers, but a pair of the 100-foot-long jets in its hangar undergoing scheduled inspection left no doubt to their ownership.
“UNITED STATES OF AMERICA.” their fuselages read.
The government patronage is no small irony for a company that does business in a market sector whose prospects are in freefall, its advocates contend, partly because Washington politicians grouped fat cats, jets, and bailouts into the same talking points.
Leiker, the Greenville town chairman, met with Gulfstream officials last month and said he’s still awaiting a response to his letter to the White House.
“I think President Obama should have stood up and said, these (jets) are really business tools,” Leiker said.
“There’s no way he could have gone to five or six different places in one day during the campaign without using a private jet.”