City OKs its share of incentives for Hawker Beechcraft

Wichita followed through on its promise to retain thousands of jobs at Hawker Beechcraft with $2.5 million in taxpayer money.

But it's not saving quite as many jobs as advertised.

In news releases, documents and statements, government and company officials said the agreement requires the aircraft company to maintain at least 4,000 jobs.

What the City Council voted on Tuesday says the company agrees to keep 4,000 jobs. But it doesn't reduce cash payments to the company unless its work force falls below 3,600.

"It's pretty egregious that we're voting on something that's a false number," said District 4 council member Michael O'Donnell.

But vote they did: 6-1 in favor of the cash incentive.

Approval was all but assured after negotiations between Hawker Beechcraft and former Gov. Mark Parkinson resulted in a December announcement that a tentative agreement to save one of the state's largest employers had been reached.

It provided Hawker Beechcraft with $40 million in state incentives, plus $5 million cash split between Wichita and Sedgwick County.

In return, the company will keep its headquarters, engineering, supply chain management, composite fuselage manufacturing, aircraft final assembly, flight testing and global customer service and support in Wichita. Louisiana had tried to lure the plant.

The council's vote Tuesday locks the city into paying $500,000 a year for the next five years as long as the company maintains at least 3,600 jobs.

Payments will be reduced proportionally for each job short of that.

If the agreement had required Hawker to maintain 4,000 employees and the company cut its work force to 3,600, that would have been a 10 percent reduction.

Instead of getting $1 million from the city and county that year, it would get $900,000.

Nicole Alexander, a spokeswoman for Hawker Beechcraft, said "4,000 is definitely our target" and that the difference in numbers may be part of a buffer built into the agreement.

"It gives the business elasticity to respond to the market on any given week," she said.

O'Donnell said the use of 4,000 jobs retained is disingenuous given that the deal reduces incentive payments only if employment dips below 3,600. He asked how the city can protect those other 400 jobs.

"The provisions of the agreement were negotiated directly with the governor of the state of Kansas, and so I'm not certain that I have a good answer for that," said Allen Bell, director of the city's office of urban development.

O'Donnell, who has opposed other business incentives, said he may have voted in favor of the incentives if the numbers had been more transparent.

"How can I vote for something that's not solid?" he asked.

The deal met other criticism.

Clinton Coen, a District 3 council candidate who was eliminated in this spring's primary election, called the deal a bailout.

"This is nothing more than the state of Louisiana pitted against the state of Kansas by the company in a ploy to get money," he told council members.

Mayor Carl Brewer challenged the 19-year-old.

Brewer said before the recession, Cessna had 12,000 employees — now it has 6,000.

The city and state are fighting against more than just Louisiana, Brewer said.

"Our competition is probably another 25 states here in the United States and China and several other different countries," he said.

Brewer asked Coen if he knew what other states are offering these companies.

"The same thing you're offering," Coen replied.

"No," Brewer said. "They're offering to build a facility, provide the land and move the company there and provide them with $500 million in cash. That's just one city, one state."

Brewer said Wichita lost 1,500 jobs to a state that paid a company $1 million per job. He did not name the company.

"So the threat is a real threat," Brewer said.

The mayor said he would be happy to set up a meeting between Coen and aircraft company officials to hear first-hand what the aviation industry is going through.

"OK," Coen said.