Iron Range board ready to bet on another airplane company

One of the brothers who started Cirrus Design, the aircraft company, years ago is using the template to start another aircraft company in Minnesota.

Alan Klapmeier now heads One Aviation, which is trying to build a new plane called Kestrel. It’s not off the ground yet, but the company is in line for a $1.5 million loan from the Iron Range Resources and Rehabilitation Board for the company’s parts manufacturing division, which makes parts for a light jet plant in New Mexico, the Duluth News Tribune reports.

But local politicians see a bigger prize: a factory in Grand Rapids where the Kestrel plane would be built.

So far, the News Tribune notes, it’s had a tough life.

Klapmeier originally planned to build the Kestrel in Brunswick, Maine, where it appears the company now has a parts facility. He then vowed in 2012 to assemble the Kestrel in Superior, where the company is based, and received promises of economic development money from the state of Wisconsin and local agencies — some $40 million in loans, grants, tax breaks and credits. The company said it would create up to 600 jobs at the plant in Superior’s industrial park, with Gov. Scott Walker praising the project as part of his effort to create jobs in the state.

The company has about 30 employees in Superior. But progress toward any plant construction has been slow, with Klapmeier blaming state economic development officials for muddying the project. State officials countered that Kestrel couldn’t secure private equity to start work.

“We’ve made no decision as to where we will finally build the Kestrel,” Klapmeier told the Superior Telegram in January. Company officials told the Telegram on Thursday that there has been no change in that status.

There’s a pretty big gamble in trying to build smaller airplanes, as Klapmeier found out with Cirrus — where he and his brother reportedly once maxed out credit cards trying to keep Cirrus afloat in its early days, and which he’s experienced with his latest company, which ran short of money in 2013, necessitating a merger with the jet-making company, Eclipse, to form One Aviation.

General aviation manufacturing is tough business. Just ask Jack Pelton, who runs the Experimental Aircraft Association in Oshkosh. He should know. He used to run Cessna.

In his association’s magazine this month, he gives a pretty sobering assessment of the market for small planes.

Worldwide, he wrote, only 377 new single-engine airplanes were delivered to customers in the first half of this year, down 4 percent from a year ago.

The higher-priced Cirrus airplane — that company is now owned by a Chinese firm — is among the best sellers, but Pelton says high fuel prices and the cost of insurance isn’t a full reason why airplane sales are so slow.

“I believe, the issue is the difficulty — or maybe impossibility — of successfully manufacturing airplanes that many pilots desire, and doing so at a profit,” he wrote.

That’s not to say Klapmeier will automatically fail in his bid to introduce another airplane to the marketplace — the Kestrel is aimed at the business flyer. It is to say that there are no sure bets to be had on the Iron Range.

  • MrE85

    A fat cat asks for a tax break, sweetheart deal and big handout in exchange for the vague promise of jobs, and many Iron Rangers fall for the con.
    Oh, and someone wants to build airplanes up there, too.

    • John O.

      P.T Barnum pretty much has it down pat.

    • Jerry

      I can’t say this is a good deal, but they have to do something. There isn’t much of a long term future in extraction industries.