Two weeks after taking office in January 2012, Wisconsin Gov. Scott Walker traveled to Superior for a stunning announcement that suggested he wasn’t blowing smoke when he vowed Wisconsin would be “open for business.”
Kestrel Aircraft Company said it going to invest $120 million in a production facility that would employ 600 workers, the most new jobs in Superior since World War II. The company would produce a high-performance, single-engine plane made from carbon fiber.
The Wisconsin Economic Development Corporation, Walker's new public-private corporation that replaced the state's Department of Commerce, quickly stepped in with $18 million in Enterprise Zone Tax Credits and a $2 million economic development loan.
But nearly two years later, Kestrel has yet to open its factory and is now 90 days late in payments on two state-administered loans.
Moreover, the company has been having trouble meeting payroll for some 100 current employees, split between its operations in New Brunswick, Maine, and Duluth-Superior. One employee told the Bangor Daily News that direct-deposit checks have been arriving late and his health insurance was dropped.
Company president Alan Klapmeier -- a legend in the aviation world who with brother, Dale, once built a plane in the family barn in Baraboo -- maintains Kestrel is only awaiting further funding.
But this recent story out of Maine suggests that Klapmeier’s vision may never take flight, noting the difficulties in start-ups trying to compete in the airplane business.
Officials in Superior, meanwhile, continue to wait. Kestrel, which has received a $2.5 million loan from the city that isn’t due until 2015, made a presentation to the city council in July and said the company was still trying to raise money to move the project forward. The city is also providing two building sites in its industrial park for production facilities.
“You never say ‘never’ and never give up,” Superior Mayor Bruce Hagen said in a phone interview Wednesday.
Hagen, who worked in the administration of former Gov. Tommy Thompson before moving back to Superior, noted that Klapmeier has experience working with the Federal Aviation Administration on previous designs. He remains optimistic the project will eventually pay dividends for the Twin Ports area.
“Getting a new company going can be a rollercoaster,” he said.
Kestrel Aircraft has received two loans that are being administered by WEDC: a $2 million state loan and a $2 million State Small Business Credit Initiative loan, which is a federal loan.
According to WEDC, the last payment from Kestrel for either loan was in June, 2013. WEDC has sent Kestrel 30-day and 60-day past-due notices, and a 90-day notice will be sent out by mid-October.
“If no payment is made, the account could be determined to be in default and, in accordance with our policies, WEDC could pursue legal remedies if the default is not resolved,” said WEDC spokesman Mark Maley.
But Maley emphasized that WEDC has been reaching out to Kestrel and is working with the company as it continues to try and raise more capital.
“It’s not uncommon for startup companies to have cash flow issues in the early stages,” he said.
Maley, who started at WEDC this week, replacing Tom Thieding as spokesman, said the state remains optimistic Kestrel can move the project ahead.
“This is an innovative company that’s developing an aircraft that has the potential to bring hundreds of jobs to Wisconsin,” he said in an email. “WEDC is aware that there are risks involved in working with leading edge technology firms and manufacturers, but we believe in supporting startups that have long-term potential, and Kestrel is one of them.”
Klapmeier and younger brother, Dale, rocked the aviation world two decades ago with their single-engine, carbon-fiber plane featuring a parachute in the tail that deployed in emergencies.
The brothers eventually located their company, Cirrus Aircraft, in Duluth and eventually passed Cessna in the number of four seat-airplanes sold. At its peak in 2007, Cirrus employed about 1,350 people in Duluth and Grand Forks, N.D. But that number has slipped amid a decline in plane orders during the recession.
Alan Klapmeier was CEO of Cirrus before being fired in 2008. He and another Cirrus director, Ed Underwood, also left the board after being snubbed in an attempt to buy the new jet aircraft business, which Cirrus is hoping to bring to market.
While Kestrel continues to work through its funding issues, Cirrus is saying the general aviation business is picking up. The firm is posting more than two dozen job openings in Duluth and Grand Forks.
Original article: http://chippewa.com
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