Parkinson calls deal with Hawker Beechcraft "a great victory"

Hawker Beechcraft (October 18, 2010)
Hawker Beechcraft (October 18, 2010) The Wichita Eagle

Hawker Beechcraft officials have reached an agreement with the state of Kansas, Wichita and Sedgwick County on a $45 million incentive package to keep the company in Wichita through at least 2020.

According to a news release, the package requires Hawker to maintain its current product lines - propeller planes, jets and defense aircraft - and keep 4,000 jobs in Wichita for the next decade.

The deal includes a $40 million incentive package from the state, including $10 million over three years for tuition reimbursement and training. The money may be used by employees attending the National Center for Aviation Training, Wichita State or any other regents institution.

It provides for $10 million to Hawker in the first year and $5 million for each of the next four years as part of the Kansas Department of Commerce's IMPACT program.

In addition, the city of Wichita and Sedgwick County each have agreed to provide $2.5 million over the course of five years.

"As the general aviation industry continues to recover from the economic recession, this agreement is a great victory for our state as it stabilizes Hawker Beechcraft's long term presence in Wichita and provides some security to thousands of employees in uncertain times," said Kansas Gov. Mark Parkinson in a statement.

During the announcement, Parkinson said the deal stabilizes Hawker's long-term future in Wichita and eliminates the possibility that the company will move.

"What we have achieved today is we have taken that issue off the table for Hawker Beechcraft," Parkinson said. "No longer will we worry about Louisiana or another southern state to take this company away from us. Hawker is here to stay."

"This is indeed a beautiful December morning. I think this is an early Christmas for Wichita," Hawker Beechcraft CEO Bill Boisture said.

"In accepting this program and committing to this program, we're committing to the further success of Hawker Beechcraft as a U.S., Kansas and Wichita-based private company and we're preserving the value of private industry in tomorrow's aviation economy ... We saw this agreement as preserving a base from which we can grow in the future."

Boisture said Hawker will keep its headquarters, engineering, supply chain, composites program, final assembly, flight testing and customer service in Wichita.

"One thing we do know for sure is that Christmas is here," Wichita Mayor Carl Brewer said after the announcement. "We're sending the continued message out to the rest of the world ... that you're not going to take what's most important to us, and that's our aviation industries from the city of Wichita, Sedgwick County and the state of Kansas."

Sedgwick County Commission Chairman Karl Peterjohn said "strengthening our aviation work force will benefit not only Hawker Beechcraft but the entire community."

If Hawker's employment drops below 4,000 over the term of the agreement, there are penalties to recover some of the incentive package, Parkinson said this morning.

"It is not a huge bailout," Parkinson said. "The amount of funds we're talking about here are relatively modest."

The incentives will not come from the state's embattled general fund, Parkinson said, but from the income tax withholding money of Hawker employees.

Gov.-elect Sam Brownback said he is "pleased” that a deal has been reached.

"This has been an extensive negotiation — important — and this is a critical factor in us keeping the aviation industry in the state of Kansas,” Brownback said.

He added that he thinks the package is "probably as far as the state can go.”

"In fact, I’m not sure we have ever given incentives for a company to stay,” he said. “We’ve given incentives to recruit companies into the state, but I think this is the first time we’ve given incentives for a company to stay.”

Hawker Beechcraft's future in Wichita has been unclear since last summer, when Louisiana began courting the aircraft manufacturer to relocate there.

The offer reportedly included hundreds of millions dollars in incentives to bring the company to Baton Rouge.

The company, which employs 6,000 people, has been in Wichita since Walter and Olive Ann Beech founded it as Beech Aircraft Corp. in 1932.

Just last week, Hawker Beechcraft officials said it could be March before they announced plans.

Parkinson had tried to counter the overtures from Louisiana with an incentives package, which relied on the company and its Machinists union reaching a new labor agreement.

Union members rejected the seven-year agreement that would have cut wages 10 percent and increased insurance contributions.

The company would have retained certain key functions and two-thirds of the 2,600 union-represented jobs in Wichita.

The Machinists' current contract expires in August.

In October, the company issued 60-day layoff notices to 350 salaried employees in Wichita. It also confirmed plans to move work that would eliminate about 800 of the company's 2,600 union jobs.

Boisture has said the recession has pushed the company to consider moving some of its Wichita work to outside suppliers, including operations in Mexico.

Those plans include shutting Plants I and II, moving King Air-related back shop operations from Plant IV, moving electrical and upholstery from Building 94 and complete outsourcing of logistic center operations.

A November report from the company estimated it would cost $22 million to close Plants I and II, which take up a million square feet and employ 1,300 people.

The company also is closing its plant in Salina.

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