Bombardier Learjet will assemble its new composite Learjet 85 business jet in Wichita in exchange for $27 million in bond financing from the state, Gov. Mark Parkinson announced Friday.
The company also agreed to not move any existing operations out of Wichita during the life of the bonds. Learjet 85 production will support 600 jobs. Of those, 300 will be new positions.
The Wichita site will be responsible for final assembly, interior completion, paint and final delivery of the plane.
The money will be used for modifications at the site, which include a new paint facility, customer delivery and production flight test facilities, and an expanded production hangar. Bombardier's facility in Mexico will fabricate the plane's composite fuselage and ship it to Wichita.
The 85 business jet is the largest Learjet to date. The program was launched in October 2007 and is on schedule to enter service in 2013.
Parkinson, Mayor Carl Brewer, and Bombardier and Learjet officials made the announcement inside a hangar attended by local and state officials and Learjet employees.
As part of the agreement, Learjet agreed not to move any existing operations out of Wichita, Parkinson said.
"We've tied the $27 million in incentives not just to the new jobs, but to keeping those operations here," he said.
Learjet officials understood the company's history in Wichita and that loyalty and quality matter, Parkinson said.
Other states, especially southern states, are after Wichita's aviation jobs. They try especially hard to woo them whenever there's a new development project in the works.
"When other states were getting very good in learning how to grow cotton and tobacco, we were building airplanes," Parkinson said. As they did, "we were developing a skilled work force."
Bombardier business aircraft president Steve Ridolfi said the company looks at all opportunities. What the state did, however, was important to the company.
"We were out of room," Ridolfi said.
The facilities must expand to take on the much larger Learjet product.
Wichita, Sedgwick County and the state has gone "above and beyond the call of duty for us," Ridolfi said.
And Learjet employees have done everything asked of them in these difficult economic times, he said.
"We wanted to build the airplane here," Ridolfi said. "Wichita was our first choice."
The past 18 months have been difficult for the business jet industry, he said. The economic effects are still challenging, he said, but there are encouraging signs.
The news Friday "is the beginning of a new chapter at Learjet," Ridolfi said.
Construction at the plant will take place in four stages.
The first is a 28,000-square-foot expansion of the final-assembly facility to prepare for the first parts, which will begin arriving in Wichita early next year.
The second is the construction of a 49,000-square-foot flight test building. Next is a 33,000-square-foot paint facility, and last is a 21,500-square-foot customer delivery center.
Construction will start in the next several months.
The state incentive is in the form of bond financing repaid from the employees' income taxes that would have otherwise gone into the state's general fund.
The incentive was possible because of a change in state law passed in 2008 when Cessna agreed to put its large new jet, the Citation Columbus, in Wichita. The project was halted in the downturn, however.
Bombardier's agreement not to move operations from Wichita is for the length of the bond. The time period is still being determined, Parkinson said.
The penalty for breaking the agreement would be loss of some of the bond money, he said.
The Machinists union hailed the news that Bombardier will keep work in Wichita as it grapples with the possibility of losing hourly jobs at Hawker Beechcraft.
Union officials have said Hawker Beechcraft is considering scenarios that include moving work out of Wichita, which would mean cuts of 50 to 75 percent of its work force.
"It is great news," union spokesman Bob Wood said of the state's agreement with Bombardier, where its hourly work force is union represented. "We're pleased as punch."
Bombardier is the second Wichita manufacturer to commit to keep work in the city.
In June, Machinists union members ratified a 10-year labor contract with Spirit AeroSystems, which committed to keep major manufacturing operations in Wichita for the life of the contract.
Now, the union is turning its attention to Hawker Beechcraft.
"We're here to try to work with all these companies," Wood said.