Search This Blog

Tuesday, March 1, 2011

Hawker Beechcraft in Chihuahua, Mexico.

The Wichita Eagle
Hawker Beechcraft new facility in Chihuahua, Mexico.

Hawker Beechcraft Corp. marked the opening of a new, 180,000-square-foot plant in Chihuahua, Mexico, on Thursday, the second of three facilities to be open by the end of the year.

Dignitaries from Mexico's local, state and federal governments joined Hawker Beechcraft leaders and board members at a ceremony commemorating the opening.

Hawker Beechcraft is investing $20 million in the project.

Workers at the plant will perform sheet metal assembly for King Air turboprops and Hawker jets along with electrical assembly work.

"We have seen a high level of quality and craftsmanship coming out of the skilled work force in Chihuahua," Hawker Beechcraft CEO Bill Boisture said during a conference call Thursday.

The company also has "great support" from the state government in Mexico, a key factor in the company's decision to expand there, Boisture said.

He declined to give details on the incentives the company will receive.

Hawker Beechcraft currently employs about 400 people at the two sites in Mexico. Employment is expected to grow to about 1,000 by the end of the year, including workers at the third facility.

In all, the company will occupy about 500,000 square feet.

Last year, Hawker Beechcraft announced that it is closing Plants 1 and 2 in Wichita and moving the work from there, along with King Air-related back shop operations, to outside suppliers and to Mexico.

"This new facility will absorb some of the sheet metal fabrication work that's moving out of these other, older facilities," Boisture said.

The parts will be major assemblies for King Airs related primarily to the fuselage, he said.

The company is also transferring about $25 million of work to outside suppliers across Kansas, although the work won't be done in Wichita, Boisture said.

"We weren't trying to not do it in Wichita," he said. It just worked out that way.

Hawker Beechcraft opened its first facility in Chihuahua in 2007 to do manufacturing of light sheet metal assembly.

"With the opening of its second plant in the city, Hawker Beechcraft reaffirms its commitment to the state of Chihuahua," Cesar Horacio Duarte Jaquez, governor of the state of Chihuahua, said in a statement.

An important factor in choosing Chihuahua was the ability to train specialized operators for the aerospace industry through the High Technology Training Center CENALTEC Campus Chihuahua, the company said.

It's a training center for machining, sheet metal, painting and other techniques and processes that trains and certifies technicians.

Hawker Beechcraft is part of an aviation hub in Mexico, which includes Honeywell, Goodrich, Cessna and Gulfstream.

When asked whether he was concerned about the drug violence in Mexico, Boisture noted that Chihuahua is about 200 miles south of the border in the eastern part of Mexico.

"To date, we've seen no difficult situations there regarding security," Boisture said. "But we are vigilant about it, as is the government of the state of Chihuahua.

"We do take caution about how people arrive at the facility and who's admitted to the facility, which I would say perhaps is one level above what you would call normal industrial security."

by Bob Weeks

in Kansas state government

This week the State of Kansas, City of Wichita, and Sedgwick County struck a deal with Hawker Beechcraft that allows Hawker to stay in Wichita rather than moving to another state.

While outgoing Governor Mark Parkinson and other leaders praise the deal, it was not a good day for Kansas.

It’s difficult to blame Hawker. That company saw similar Wichita-based companies receive corporate welfare, most recently Bombardier Learjet. Who can blame Hawker for wanting the same? In fact, when the state and local governments are willing to readily hand out corporate welfare, you can make a case that Hawker has a fiduciary duty to its shareholders to seek the same.

Therein lies the problem: Kansas’ approach to economic development is piecemeal. We respond to problems, as in the case of Hawker. But the state’s response gives more companies the incentive to come up with their own “problems” that require state intervention.

When recruiting or retaining companies, the state and its local governments presume they have the ability to select which companies are deserving of public subsidy.

What we have is a situation where a relatively small number of companies receive help from the state and its taxpayers, which only serves to increase the cost of business for everyone else.

Nonetheless, politicians and bureaucrats call this making an investment in, say, Hawker Beechcraft or whatever company is asking for handouts or tax breaks. The problem is that we don’t know if investing in these companies is the right investment, if government should be making these investments at all. (In the case of Hawker Beechcraft, there is some evidence that this company may need to shrink substantially in order to survive, handouts notwithstanding. See Report: Hawker should divest all but King Air.)

We need economic development policies that nurture all companies. Somewhere in Wichita or Kansas there is a small unknown company that has half a dozen or so employees — maybe more, maybe less — that is working on some innovation. If we’re lucky, we have many such companies. These companies could be working on a new technology, manufacturing process, computer software, video game, internet site, food processing technology, retail concept, chemical process, restaurant idea, engineering methodology, agricultural process, airplane wing — we just don’t know. Many will fail. But some will succeed, and few will, hopefully, succeed in a big way.

But these small startup companies may not fit in to the economic development programs the city and state have. Any of these now-small companies could become the next Cessna, LearJet, Beechcraft, or Pizza Hut. We just don’t know — we can’t know — which small companies will succeed. But these companies, when in small startup stage, struggle to pay the taxes that large companies are able to escape. Being small, they may also be disproportionally impacted by regulation. It’s not necessarily the case that a small startup aviation company is competing directly with Hawker Beechcraft and is handicapped by the larger company’s tax advantages and handouts. But these two companies could be competing for the same employees, for example, and that puts the smaller company at a disadvantage.

How can we identify which companies are deserving of government subsidy? Which companies should have their tax burden softened at the expense of others? Allocating resources — deciding what to do — in the face of uncertainty is the crux of entrepreneurship. It’s something that government is not equipped to do, as its incentives and motivations are all wrong.

In order to succeed, Kansas needs to embrace dynamism in its approach to economic development. For more on this see Kansas economic growth policy should embrace dynamism and Embracing Dynamism: The Next Phase in Kansas Economic Development Policy.

Unfortunately, the Hawker Beechcraft deal, along with most of the policies of the state and the City of Wichita move in the opposite direction: towards more state-controlled economic development.

Your feedback is always welcome.
Thank you!

No comments:

Post a Comment