Bombardier Learjet announced Monday it is ready to expand its Wichita aircraft facility and add 400 high-paying jobs, provided local and state governments approve incentives.
The $52.7 million project includes three new buildings and 400 jobs in the first year. Bombardier would expand its flight testing capacity and move more of its company-wide engineering and information technology functions to Wichita.
The company is asking the city and county governments to each contribute $1 million toward the cost of removing and rebuilding existing parking lots to provide the space for the new buildings. The company would continue to lease the new parking lots from the Wichita Airport Authority. The incentives also include property tax abatements.
The Airport Authority would also apply for a $2 million federal economic development grant to help pay for the new parking lots.
The incentives are on today’s Wichita City Council meeting, with a similar agreement slated to go before the Sedgwick County Commission next week. Company officials said they needed the incentives to help make the business case for the expansion to their parent company.
In addition, the company is negotiating with the state for an unspecified amount of incentives, said John Dieker, vice president of strategic projects for Bombardier Learjet. That would be in addition to the 600 new jobs that the company committed to in 2009 in exchange for state incentives for its Learjet 85, a new all-composite aircraft to be assembled and finished in Wichita.
Dieker, who is based in Wichita, said the incentives were needed for the deal to make financial sense to Bombardier executives.
“We are proud of the relationship with the city of Wichita,” he said. “We are looking for that relationship to continue. This gives us the means and mechanism for that to continue.”
Wichita was a natural for the project, he said, because the concentration of engineering and technical skill is almost unique in the world.
The project is especially beneficial for Wichita because it continues to expand the plant’s mission beyond just making the light Learjets, which have been hard hit in the recession. Bombardier has put much of the flight testing for its larger jets – such as the CRJ1000, and the Global and Challenger models – in Wichita.
“This diversifies our workforce and gives us a greater stability within the organization as we weather some of the recessionary activities we’ve been in,” Dieker said.
If the deal announced Monday is approved, he said, the company would be ready to start work in the spring. The company would hire 400 engineers, IT staff and support staff, with a payroll of $47 million in the first year, for an average of $117,500 per job. That would rise to 625 jobs and $77.5 million by 2014 and settle down to 450 jobs by 2017, the company said.
The company has about 3,000 employees now.
The company would spend $48.7 million on the new facilities, including an aircraft delivery center, a paint facility for the Learjet 85 and a production flight facility for testing before delivery.
The package was coordinated by the Greater Wichita Economic Development Coalition.
The mood was upbeat at the Monday morning news conference at Wichita’s Mid-Continent Airport to announce the plan.
“With a project like this, the only thing you can say is, ‘Wow,’ ” said Wichita Mayor Carl Brewer.
He said he would back the deal at today’s City Council meeting.
Dave Unruh, chairman of the Sedgwick County Commission, said he also would support it and tried to pre-empt opposition.
“These projects are smart investments because they provide a positive return on investment,” Unruh said.
But the return is actually smaller than most past economic development projects, according to calculations by Wichita State University’s Center for Economic Development and Business Research. The coalition’s official benchmark is for each project to generate a return in taxes of 1.3 times the government incentives. This project has a return of 1.26 for the city and 1.23 times for the county.
“That is the target, but the city and county can approve whatever they think appropriate,” said Kasey Jolly, senior research economist at the center.
She said this deal had a smaller return than is typical because there won’t be any property taxes on the new buildings for 10 years as part of the deal, and the expected payroll – despite the very high average salary – is relatively small compared to the incentives.
Speaking at the Rotary Club luncheon on Monday, Wichita City Manager Robert Layton said the expansion was important for the area.
"The thing that is so important to us – and we don’t want to lose sight of this – is we’re diversifying our aviation cluster,” he said.
Sedgwick County Manager William Buchanan, also at the luncheon, said incentives may not seem fair, but they are necessary.
"I don’t want to loan multibillion-dollar companies money,” he said. “But if we want to keep our jobs and remain competitive, that’s what we have to do."