By Molly Mcmillin
Once again, city, county and state officials are grappling with how to keep aviation jobs in
Last week, Hawker Beechcraft CEO Bill Boisture said the company is considering moving jobs to
Local planemakers are constantly being wooed by other states seeking
Spirit AeroSystems, for example, chose the little town of
Wichita City Manager Robert Layton said he and Mayor Carl Brewer expect to meet this week with Hawker Beechcraft officials to discuss what the city can do.
“We truly need to listen to them,”
Gov. Mark Parkinson met last week with Boisture at the Farnborough International Airshow in
“The governor expressed (that) he hopes they’ll continue to be part of
Parkinson also met with Bombardier Aerospace officials about jobs at its Learjet plant as the west
Details of a collaboration about “securing the future” of the Learjet site in
Hawker Beechcraft employs 7,000 people, including 6,000 in
Hawker Beechcraft officials say they must reshape the company to be profitable in a down market for business jets. They said they are exploring ways to address the company’s overhead and other costs, particularly in the production and manufacturing areas.
Earlier this year, the company said it would close its long-standing
The market for the company’s products decreased dramatically over the last 18 months, Boisture said.
“Our view is that this is not a momentary decrease, and we believe strongly it’s necessary to adjust the cost structure of the company to be able to be profitable in a small market,” he said.
Boisture said a series of decisions will be made by the end of the year. The possibilities include looking at sending work to outside suppliers, to
“They’re all possible,” Boisture said.
The local response
Sedgwick County Manager Bill Buchanan acknowledged that this is a tough time to have to produce incentives, but it can be done.
“A budget is never about money,” he said. “It’s about priorities.”
The county has a $75 million rainy-day reserve fund, although $14 million of that may be used to plug a hole in the coming county budget.
“We’re very concerned about their decision-making process, but I don’t know of any words we can say to shift a business decision,” Buchanan said. “If there’s anything we can do, I would expect them to ask.”
The county also contributed $5 million for the
Hawker Beechcraft’s consideration of moving work outside
“State and local government are going to have to get involved,” he said.
Effect on community
What impact losing jobs at Hawker Beechcraft would have on the community is speculation, because the company has not made any final decisions.
But Jeremy Hill, director of the Center for Economic Development and Business Research at
If that were the case, the local economy would lose nearly $90 million a year in payroll. When the ripple effect on other jobs in the community is included, that impact expands to nearly 8,000 jobs and $200 million a year in lost payroll.
The effect would be heightened by the impact on local subcontracting businesses, and reduced when the laid-off workers found new jobs.
The report analyzed labor, utilities, taxes, construction, shipping and other factors.
Still, Boyd said he thinks there will be a “tremendous amount of projects
Labor will cost less in places like
Clients are also concerned that the Machinists’ new 10-year contract with Spirit AeroSystems has “upped the ante” because of the increase in pension benefits, he said.
About 40 percent of a business’ labor costs are services such as pensions, health care and workers’ compensation.
“This is a time when manufacturers want to reduce those costs,” Boyd said.
It has a highly skilled workforce, is centrally located, is a right-to-work state and has a friendly business climate, they say. Its cluster of aviation suppliers, the National Center for Aviation Training and the National Institute for Aviation Research in
Boyd said it’s also difficult for a company to move large operations, and businesses sometimes threaten to move as a strategy in negotiations with unions or economic development officials.
“A big part of this business is posturing,” Boyd said.
Large companies periodically re-evaluate how well their location helps them compete.
They run a complex calculation: the cost of labor, utilities, transportation, taxes and other costs at their present location vs. those costs, plus the cost of moving, minus the cash and incentives of some other place.
This is especially important in mature industries such as corporate jet-making that are growing slowly and face heightened competition – forcing them to focus on cutting costs to maintain profits, said David Brandon, senior vice president of Site Selection Group, a
In his time here, he said, he heard many
If companies aren’t making money because of their cost structure, they must make changes, Gerbino said. They have a fiscal responsibility to make money for their stakeholders, she said.
Governments can only do so much because they only have power over some business costs,
“I don’t know how far you can move the needle, frankly,” he said.
But it’s not impossible. When two choices are close, governments can change the calculation with enough money. States such as
But if luring Hawker Beechcraft, or any aviation work, turns into a bidding war,
“We don’t have war chests or ‘seal-the-deal funds’ where you can literally throw cash at companies to keep them from leaving,”
The state does offer incentives for companies wanting to move or expand in
Other states aren’t the only places looking for good aviation jobs. Other countries are, too.
The aerospace industry in
Hawker Beechcraft, Cessna, Bombardier Aerospace, Honeywell, Zodiac, Safran, Goodrich, Triumph, GE, Textron International Mexico and Pratt & Whitney are some of the companies with operations there.
“It’s very important that people stop considering these companies to be local companies,” said Cessna spokesman Doug Oliver about
To compete globally, the companies have to have a global presence, Oliver said.
At the same time, competition and cost pressures are intense.
“Sales are way down, so the competition for the remaining sales is just going to be phenomenal,” Oliver said. “So everybody is looking at what can we do to maintain quality and reduce cost.”
Cessna employs 500 people in
According to Intermex Industrial Parks, a company that helps businesses locating to
Last month, Bell Helicopter opened a 122,000-square-foot facility in
One advantage of
Hourly workers at Hawker Beechcraft, earn an average of more than $50,000 a year, more than $24 an hour.
Many industrious Mexican workers come to the
The country’s drug violence also makes security an issue, he said.