Aviation revolutionary picks BNAS for new venture; Kestrel Aircraft to anchor Brunswick Landing, create up to 300 jobs

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AUGUSTA — The agency redeveloping Brunswick Naval Air Station signed an anchor tenant Friday morning, a deal Gov. John Baldacci said would reverberate well beyond the soon-to-be-decommissioned U.S. Navy base.

Kestrel Aircraft Co. inked a six-month lease with the Midcoast Regional Redevelopment Authority to occupy Hangar 6 at the base, which is closing in May 2011 and will be renamed Brunswick Landing. 

The start-up company, the latest venture of Alan Klapmeier, co-founder of Cirrus Aircraft, in Duluth, Minn., will develop, test and manufacture a new composite turboprop aircraft called the Kestrel.

Baldacci and MRRA officials said the $100 million project could create up to 300 jobs when production begins, roughly three years from now.

Base redevelopers also believe the program will lure other base tenants and boost business for local composites specialists Harbor Technologies of Brunswick and Hodgdon Yachts, which operates in East Boothbay, Richmond and Portland. 

“The international appeal and worldwide demand we foresee for the Kestrel airplane will benefit jobs throughout the state, boost Maine’s economic competitiveness and showcase Maine’s world class innovation economy,” Baldacci said.

Klapmeier, who is often credited with revolutionizing the piston-airplane manufacturing industry at Cirrus, showed off the Kestrel prototype Friday after flying into the Augusta State Airport.

The press event, attended by state and local officials, U.S. Rep. Chellie Pingree, D-Maine, and representatives of the other members of Maine’s Congressional delegation, was held in Augusta because the prototype could not land at BNAS, where airfield activity ended shortly after the departure of the last P-3 squadron last year.

Once in production, the aircraft won’t be cheap, selling for an estimated $2 or $3 million. The pricetag prompted questions about the market for the plane.

“One of the hardest things about the aviation industry is convincing the business world that there’s a market,” said Klapmeier, who later joked the market for airplanes was zero until 1908, the birth of manned flight.

“In our view it’s more fundamental than that,” he added. “To us the question is, ‘Do people need transportation?’ The answer is yes.”

While at Cirrus, Klapmeier developed composite aircraft that have resulted in over 4,500 sales worldwide, including the best selling aircraft over the last seven years, the SF22.

On Thursday, MRRA Executive Director Steve Levesque said the deal with Kestrel is significant on several levels, including hitting two of the base reuse plan’s target industries – aerospace and composites – and because it adds high-paying manufacturing jobs, which he called the “holy grail” of economic development.

“The multiplier on manufacturing jobs is significant,” Levesque said. “For every one manufacturing job, five more are created to support it.”

The announcement was also a boost for the MRRA, which found itself on the defensive in the past year for an aborted deal to bring Oxford Aviation to the base. The controversial effort sowed tension with some Brunswick town officials and distrust among some members of the public.

“We’re actually going to have a business on the base before it closes,” Levesque said. “That’s unheard of in the (Base Realignment and Closure) world.”

Levesque said Klapmeier called him in the early spring inquiring about the base property. A succession of meetings and tours of Hangar 6 followed. Levesque took the project to an executive session of the MRRA board this week. On Friday, the board voted unanimously to sign the deal.

Two members, Steven Weems and Charlie Spies, abstained because they’ve been assisting Kestrel pursue a federal tax credit program.

Levesque said Kestrel hopes to move to the base in November, around the same time MRRA is expected to take possession of the airfield. The company will likely start with 50 or 70 engineers, who will begin modifying the Kestrel prototype, the JP10, into a six- to eight-passenger aircraft.

A video of the prototype can viewed on YouTube at http://bit.ly/ba8VM8

It’s unclear if the engineers will be hired locally, or brought in from Farnborough Aircraft of Great Britain, which Kestrel recently acquired.

The six-month deal required approval by the Navy, which still owns Hangar 6. Once MRRA takes possession of the facility, the lease is expected to be extended.

Levesque said the start-up company is contributing $90 million of the $100 million deal in equity investment and debt. Another $10 million will likely come from state-sponsored bonds. An additional $1.5 million will be drawn from federal grants for building improvements, including about $800,000 for a paint booth.

The company will eventually occupy all of Hangar 6, a 170,000-square-foot facility that the Navy completed in 2004.

According to Levesque, the company choose Brunswick over two other competitors: Kansas and Florida – states known for luring aviation companies.

Klapmier said the company’s decision was not the result of a “bidding war” between the three locations; rather, it was sold on the Brunswick facility, the composites cluster and the planned joint campus between Southern Maine Community College and the University of Maine engineering school. 

The campus has been touted as being able to tailor its curriculum to the needs of incoming businesses to develop a ready workforce. In some cases, company employees could serve as adjunct professors. 

Additionally, Levesque said, Kestrel could draw from the region’s retired military and boatbuilders and mechanics, which will have similar skill sets to manufacture composite aircraft.

“This is good for Maine and Brunswick,” he said. “Brunswick is within 30 miles of 70 percent of the state’s workforce.”

Levesque said the deal could also help expand MRRA’s marketing efforts. Klapmeier, whose future has been closely monitored by the aviation industry since he left Cirrus, was expected to announce the Brunswick operation at AirVenture this weekend in Oshkosh, Wis., the largest aviation convention in the country.

“(Klapmeier) wanted to announce at Oshkosh, but I told him to do it in Maine first,” Levesque said.

Steve Mistler can be reached at 781-3661 ext. 123 or smistler@theforecaster.net

Brunswick Naval Air Station commander Capt. William Fitzgerald, left, Kestrel Chief Executive Officer Alan Klapmeier and his business partner Anthony Galley with a pre-production Kestrel turboprop Friday, July 23, at Augusta State Airport.

Video of the Kestrel turboprop

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Alan Klapmeier, CEO of Kestrel Aircraft, takes questions during the July 23 press event at the Augusta State Airport. Klapmeier hopes his new venture in Brunswick will lead to the development of a single-engine jet.

Alan Klapmeier: From Cirrus to Kestrel

One thing is quickly apparent about Alan Klapmeier: he’s not averse to risk.

According to accounts in trade magazines, newspapers – and his brother – Klapmeier might be more visionary than businessman.

In 1984, Klapmeier and his brother Dale founded Cirrus Aircraft, based in Duluth, Minn. According to a story in the Duluth News Tribune, the brothers’ trek into aviation began when they made kit airplanes in a barn in Baraboo, Wis.

At its peak, Cirrus was Duluth’s largest employer and manufacturer of the world’s best-selling aircraft, the SR22. The company had more than 1,500 employees at several locations, including Duluth, South Dakota and Brisbane, Australia.

The company’s success and reputation for revolutionizing the piston-aircraft manufacturing business through composites drew attention, nationally and internationally.

The Klapmeier brothers were also featured in the book “Free Flight,” by James Fallows, a 25-year contributing writer for The Atlantic and former speech-writer for Jimmy Carter. Fallows’ book explored the technical revolution of travel, putting Cirrus alongside NASA as leading innovators in the industry.

In 2001, a venture capital firm bought a majority stake in Cirrus, investing about $100 million. The firm, Arcapita, at the time operated as Crescent Capital, the U.S. investment arm of the First Islamic Bank of Bahrain.

The company later developed the CAPS parachute system, which is built into the airframe of Cirrus planes. During an emergency, the parachute deploys so that the plane, as well its passengers, can float to safety.

But the recession hit Cirrus hard, forcing the company to slash nearly 10 percent of its workforce, according to newspaper reports. The economic change also appears to have altered the company dynamic, specifically Alan Klapmeier’s management role.

According to several reports, Klapmeier’s quest for innovation clashed with his board of directors’ more cautious approach.

In February 2009, Klapmeier was replaced as the company’s chief executive. He remained chairman, but power was transferred to the new CEO, Brent Wouters, formally the company’s chief financial officer.

Later, as the company slowed development of the SF50, a sleek, single-engine jet designed to launch Cirrus into the corporate jet market, Klapmeier attempted to buy the project with his own team of investors.

Negotiations between Klapmeier and Cirrus stalled in July 2009. Shortly thereafter, Cirrus notified him that the company would not renew his contract.

“It was clearly their choice,” Klapmeier told Aviation International News.

Later, in a Duluth News Tribune story, Dale Klapmeier described the differences between him and his brother.

“Alan is a dreamer, and he’s extremely aggressive in what he wants,” Dale Klapmeier said. “I’m far more conservative than he is, and I’ve always loved the hands-on stuff.”

The departure was difficult for Klapmeier, but he quickly formed a new management team and targeted the acquisition of Farnborough Aircraft, which was eyeing production of the Kestrel, a single-engine turboprop that – thanks to composite construction and recent innovations in smaller turboprop engines – boasts speeds of larger jets.

On Friday, Klapmeier commented directly on his visionary reputation.

“I often get accused of not focusing enough on the business end and too much on the aviation end,” he said. “I think that’s unfair. The planes I want to develop are the planes I think people want to fly, and buy.”

As for his coveted SF50 jet project, Klapmeier said the single-engine jet is not out of the picture for Kestrel.

“(The single-engine jet) is very close to my heart,” he said, adding that he hoped the VP10 project would help pay for the future development of his own single-engine jet.

If he’s successful, the development of both aircraft will take place at Brunswick Landing.

— Steve Mistler

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