What’s on the Horizon for the Air Capital?
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As it’s done for nearly a century, the Air Capital of the World is closely studying the aviation industry’s radar. How will the city’s leading employers fare during a potential recession? What trends can we expect to see from aviation manufacturers? Should employees be concerned about outsourcing? Exactly how big is the industry’s impact on Wichita? Wichita magazine set out to find answers.
We conducted phone interviews with representatives from Cessna, Spirit AeroSystems, Hawker Beechcraft and Bombardier Learjet to find the truth about the state of aviation in Wichita. (Boeing declined to comment because of the local branch’s military focus.) The answers may surprise you.
RIDING HIGH
Right now, business aviation manufacturers are riding high. General aviation is coming off a historic year with record deliveries and backlogs. Wichita delivered 42 percent of all general aviation aircraft worldwide last year, and experts expect more of the same. “We think business aviation is on the rise,” says Cessna’s Doug Oliver. Bombardier Learjet’s Leo Knaapen seconds such optimism. “It’s almost a gee-whiz situation,” he says.
While commercial aviation manufacturers don’t anticipate record orders in 2008, the backlog is still increasing. “This is a cyclical industry, but the lows are higher,” says Spirit AeroSystems’ Debbie Gann. “Today, even a bad year is better than in the past.”
PACKING A PARACHUTE
As economists warn of a looming national recession, just how will aviation companies in Wichita fare? Can they make it without experiencing too much turbulence? “Our senior leadership has said so,” says Oliver. “We believe the strength of the international market, our order books and our focus on sustainable growth will go a long way to soften the blow if something should come to Wichita.”
Hawker Beechcraft’s Andrew Broom agrees. “Orders and international markets are helping a lot,” he says. “Last year we saw for the first time a shift in the majority of orders coming from outside the United States.” At Spirit and Bombardier Learjet, it’s the same story. “We always feel more secure when there’s a backlog because those are planes that are sold and need to be built; they insulate the industry from economic struggles that U.S. airlines are experiencing,” says Gann, who says Spirit’s backlog is primarily composed of foreign orders. “Even if we have economic problems here, it’s enough of a global market that it’s not as huge of an effect.”
RECRUITING TALENT
Like other aviation manufacturers, Bombardier Learjet is also seeing increased demand in countries across the world. “The pipeline continues to be very strong. That’s basically because we’re seeing the emergence of international markets,” says Knaapen. “At a time when U.S. demand is lessening, we’re able to sustain production and increase production to meet overall greater demand.” The company is developing infrastructure in India and China, but Knaapen is also seeing a rise in other countries that aren’t talked about as much. “What seems to be overlooked is the establishment of the corporate aviation industry in Europe,” he says, referencing traditional markets such as the United Kingdom, Switzerland and Germany, as well as Eastern Europe and places like Bulgaria, Romania and the Czech Republic. “Europe is starting to sway from toy to tool,” he says. “Right now, we’re seeing in Europe what happened in the United States 30 years ago, where business jets are going from the fat cats to a business necessity.”
As international markets drive profits, should Wichitans be concerned about outsourcing? “It’s always a balancing act,” says Oliver. “As production rises here, we don’t have the room or the people to do some of the jobs.” Right now, Cessna is adding plants here in Wichita, as well as Columbus, Georgia and Chihuahua, Mexico, to keep up with demand. Other representatives agree that it’s essential to adjust to a global market. “You’ve got to do what is going to keep you competitive in the marketplace,” says Broom. “These business decisions always have to be based on finding the best products at the best quality.” This is especially important as the competitive landscape changes with companies like Japan and Brazil getting into the industry. Gann says, “The reality is we live in a global market place and we compete globally. I think it’s a fact of life that the world is one big market, and we’ve got to be competitive.” At Bombardier Learjet, the Learjet 40 and 45 are manufactured elsewhere and shipped to Wichita for completion. “That’s the way Learjet conducts its business,” says Knaapen. “Most of the industry is going this way. It’s becoming more integrated.”
To keep up with the industry’s record backlogs and new models, how many new jobs can Wichita expect to see? “As an industry, we talk to the legislature, and the major companies are predicting about 1,000 new jobs per year for the next 10 years,” says Gann. In addition to hiring new employees for industry growth, officials predict Wichita aviation companies will need to replace about 10,000 retiring employees during the next decade.
To meet this challenge, the state legislature approved $5 million for research at the National Institute for Aviation Research at WSU and another $5 million for the National Center for Aviation Training at Jabara. It’s also essential that these companies retain their current employees by keeping job satisfaction high and helping the community.
