Friday, December 30, 2011

Report: Wisconsin city wooing Kestrel Aircraft, its 300-600 jobs away from Brunswick, Maine.

By Beth Brogan, Times Record
Posted Dec. 30, 2011, at 2:12 p.m.
Last modified Dec. 30, 2011, at 4:45 p.m

BRUNSWICK, Maine — Kestrel Aircraft Co. is negotiating with development officials in Superior, Wis., to create 300 to 600 jobs initially envisioned for Maine, a local redevelopment official confirmed Friday.

Steve Levesque, executive director of the Midcoast Regional Redevelopment Authority, said Friday that Kestrel founder Alan Klapmeier confirmed a story in the Duluth (Minn.) News Tribune reporting on a Jan. 16 public hearing at which the city of Superior would consider a development agreement with Kestrel for the company to build parts for its new single-engine turboprop plane there.

Also on Friday, Gov. Paul LePage and the Maine Department of Economic and Community Development touted another business at Brunswick Landing, the American Bureau of Shipping Maine Modeling Center, which saw strong growth in 2011 and has plans to add another 16 jobs, all of them local hires.

Neither Klapmeier nor his spokeswoman immediately returned phone calls Friday.

Superior Mayor Bruce Hagen told the paper that the city’s redevelopment authority would hold the Jan. 16 hearing to consider a development agreement with Kestrel, and that state housing and economic development officials would present Kestrel with their proposal on Thursday.

Levesque was taken by surprise this morning when told of the story, he said, and called Kestrel officials who confirmed it.

“They said no decisions have been made, but they confirmed they have been talking with [officials in Superior],” Levesque told The Times Record.

The public hearing is necessary before the city could present an incentive package to Kestrel, according to Levesque.
Calls to city and development officials in Superior were not immediately returned Friday.

The jobs in question initially were envisioned for Maine, and perhaps Brunswick, where Kestrel has signed a 10-year lease for part of Hangar 6, the newest and largest hangar at the former Navy base

But in October, Klapmeier told The Times Record that some of the jobs might be located elsewhere because funding expected from Wiscasset-based CEI Capital Management of Maine did not materialize.

In October, Klapmeier said he was negotiating with officials in Berlin, N.H., to open a Kestrel facility near a new biomass plant there.

Levesque said at the time that CEI Capital Management informed Kestrel in May that it could not allocate more than $20 million in New Market Tax Credits to the Kestrel project, leaving a gap of approximately $60 million.

Since then, MRRA has worked with Kestrel, Maine Economic Development Commissioner George Gervais, the governor’s office, Sen. Stan Gerzofsky, D-Brunswick, and others at the state and federal level to find additional funding.

“We’re still working on it,” Levesque said Friday. “We’re trying to be as helpful as we can to support the growth of the company [but] we only have so many tools. You get into a situation where it becomes a bidding war. Maine doesn’t always compete very well with other states, if that’s what it’s going to come to, but I’m not sure that’s what it’s going to come to.”

MRRA has applied to become eligible to allocate $70 million in federal tax credits, and Levesque said he will hear in January if the application was successful.

Gervais did not immediately return a phone call or email Friday.

“We’re all taking this seriously and negotiations are going on,” Gerzofsky said Friday. “I have been working with Alan Klapmeier for quite a while now and I believe they truly want to be in Maine. They have made a commitment to be in Maine. It’s just a short-term funding issue we have to find a way to overcome, in this very competitive economy … everybody’s trying to steal jobs. A lot of investors have been trying to woo every company to come into their state, just like we’re doing, and this is becoming competitive.”

Terms of Kestrel’s lease with MRRA require the company to attempt to secure up to $90 million to support its aircraft design, development and production operation, and that MRRA would work with CEI Capital Management and others to “facilitate project financing.”

As of October, Kestrel employed about 25 people in Brunswick, including 10 designers. Klapmeier said at the time that while he always assumed all the new jobs would be in Brunswick, other communities offered advantages that he had to consider.

“We have some assets here that are pretty significant,” Levesque said. “The state-of-the-art hangar, [Southern Maine] community college, the composites alliance and the University of Maine, the work force — a lot of elements that are intangible. It’s important to us that as we go forward that whatever we do, we can support it publicly and that it makes sense from a business perspective for MRRA and for the state.”

What could be a major blow to the state’s efforts to create new jobs was tempered Friday with an announcement from LePage and Department of Economic and Community Development Commissioner George Gervais that another business at Brunswick Landing, American Bureau of Shipping Maine Modeling Center, is poised for growth.

The nonprofit ABS Modeling Center, which creates computer-aided design models of seagoing vessels for clients with the intent of ensuring the accomplishment of safety and legal requirements, announced in April that it was moving part of its operation from India to the former air station, which is now known as Brunswick Landing. At the time, ABS promised 30 good jobs immediately followed by as many as 100 more.

In a December 21 letter to LePage from ABS Chairman Robert Somerville, which was distributed by the administration Friday, Somerville said the company’s first five months of operations in Brunswick have been “outstanding.” There are 30 employees at the center and Somerville said he expects another 16 new employees in 2012.

“The early success of the Maine Modeling Center would not have been possible without support from you and other leaders in Maine,” wrote Somerville to LePage. “I sincerely appreciate all you have done to assist ABS further its mission of promoting safety throughout the maritime industry.”

BDN writer Christopher Cousins contributed to this report. 

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