Duluth Gives Cirrus Massive Hangar, With Job Creation Pledge

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The City of Duluth’s economic development arm has essentially given Cirrus Aircraft a massive 189,000-square-foot aircraft maintenance hangar at the local airport in exchange for adding jobs at its expanding campus there. According to the Duluth News Tribune, the former Northwest Airlines/Delta Air Lines maintenance depot is owned by the Duluth Economic Development Authority and when Delta left town in 2005 it languished largely empty until an MRO named AAR took it over in 2012. AAR closed up in 2020, and the city was left with a large and complex building to maintain at a cost of $57,000 a month. Last week it struck a deal with Cirrus to sell the $10 million building for $1 and to transfer the prepaid lease of the 39 acres surrounding it to Cirrus.

The building has a major connection to Cirrus. After Delta left, the company rented part of the cavernous structure to build the prototype of the Cirrus VisionJet. These days Cirrus, which is now owned by a Chinese company, can hardly keep up with orders for the jet and its SR22 and SR20 piston aircraft. Cirrus is Duluth’s biggest employer and the deal ensures it will keep that title. The company must hire at least 80 more employees in Duluth making at least $36.05 an hour in addition to the 1206 already working there. 

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15 COMMENTS

  1. The Chinese own probably more companies, vendors, and suppliers, than you would think. If you ever need a part for anything, odds are it will say Made In China. Or else assembled in the USA. With globally sourced parts. I will let you imagine just where those parts and pieces are sourced from…..

  2. Sounds like a loss for everyone. Government should not be in the business of owning private property like a hangar. It has no business telling a business who to employ, how many, or at what pay them. To make matters worse, the City of Duluth is now dependent on the whims of a Communist regime that locks people up for professing a faith other than to the the regime. I predict that this does not end well for Cirrus or Duluth.

  3. Seems like YARS and Kent M. occupy opposite ends of the spectrum. The weird thing is that I agree with both of them!

    Regarding Kent’s prediction, I tend to think that the Chinese, like business people everywhere, will behave no differently than business people everywhere. The Midwest ‘rust belt’ was created, after all, by 100% American companies seeking to make the most they could.

    I think that for now, Cirrus has a good deal and the city gets to reduce its operating costs. As long as the demand for airplanes is strong, the deal works.

    That demand relies, in part, on the national and international economies, which in turn rely upon the national government economic policies. When governments are supportive of industry and supportive of the overall economic welfare of its citizens, things tend to be good. Keynesian economics seems to describe this state of affairs.

    On the other hand, when a nation’s economic policies permit significant income inequality, the population gets squirrely, extremism on both sides of the spectrum arise, and social order degrades. The resultant instability then throws the whole system into disorder and disarray. The historical precedents in many countries clearly demonstrates that.

    Years ago, a local history professor explained this simply. The US was strong after WWII because (aside from it being the only manufacturing base in the world at the time) 1) government was strong, 2) business was strong, and 3) unions were strong. Together they formed a strong pyramidical base that, basically, fought one another. This balance kept the playing field level, and everyone prospered.

    So, for now, the Duluth Cirrus deal looks good. Perhaps the Federal government might consider placing some sort of limits on the amount of foreign ownership a company can accrue. Of course, the major US auto manufacturers might balk at that, as they do a huge business in China!

    • “On the other hand, when a nation’s economic policies permit significant income inequality, the population gets squirrely, extremism on both sides of the spectrum arise, and social order degrades. The resultant instability then throws the whole system into disorder and disarray. The historical precedents in many countries clearly demonstrates that.”

      As opposed to what ? Ripping success out of the hands of innovators to give it away to politicians ? There are no “historical precedents” that elevate socialism to anything other than totalitarianism. There will always be have-nots, haves and the elites. It’s a good thing. Trickle down economics works.

  4. So basically Duluth sold a hangar worth 10 million to a Chinese company for a dollar with the promise to add 80 more jobs. China doesn’t need spies, they can just buy whatever technology they want from a country that seems happy to provide it to them.

  5. This is a great story about incredible tenacity and success. Hopefully some US-based hedge fund will ultimately buy Cirrus. How TF did they end up in Chinese hands ? Let’s guess, hard times during the THFC of 2010 ? I’d like to start of US fund of investors willing to put in 850k each to buy the company on the agreement they received an SR22GTS for the same price. Why wouldn’t that work ?

  6. China’s economic growth.

    1978: China began to open up and reform its economy.
    1979-94 productivity gains accounted for more than 42 percent of China’s growth.
    2010: China became the world’s largest exporter.
    2011: Cirrus was sold for US$210M to China Aviation Industry General Aircraft (CAIGA), a subsidiary of Aviation Industry Corporation, which is wholly owned by the Government of the People’s Republic of China. The announcement of the sale was met with mixed responses.
    2013: China became the largest trading nation.
    2014: China’s economy surpassed that of the US.
    2017: China became the largest economy in the world.
    “Curious about why China has done so well, an IMF research team examined the sources of China’s growth and arrived at a surprising conclusion. Although capital accumulation–the growth in the country’s stock of capital assets, such as new factories, manufacturing machinery, and communications systems–was important, as were the number of Chinese workers, a sharp, sustained increase in productivity (that is, increased worker efficiency) was the driving force behind the economic boom. During 1979-94 productivity gains accounted for more than 42 percent of China’s growth and by the early 1990s had overtaken capital as the most significant source of that growth. This marks a departure from the traditional view of development in which capital investment takes the lead. This jump in productivity originated in the economic reforms begun in 1978.” IMF

  7. Good point Kirk W.: Take the money and run?

    By AVweb’s Editorial Staff – Published: February 28, 2011, Updated: April 12, 2019

    Cirrus Industries Inc., a parent company of Cirrus Aircraft, has been sold to China Aviation Industry General Aircraft Co. (CAIGA) of Zhuhai, China, but it appears the company will continue to build parts in Grand Forks, N.D., and assemble airplanes in Duluth, Minn. It has long been rumored that a Chinese company would acquire Cirrus and the final announcement was made Monday morning. CAIGA is a subsidiary of Aviation Industry Corporation (AVIC), the state-owned aviation company of China that makes everything from military jets to airliners. In a news release, Cirrus CEO Brent Wouters says the deal will be a shot in the arm for the company and for its employees in Grand Forks and Duluth. “CAIGA understands the strength and the talent of Cirrus’s workforce and the prominence of the Cirrus brand in general aviation,” Wouters said. “Through this transaction, CAIGA will invest in our employees in both Minnesota and North Dakota by committing to the continued use of our world-class production facilities.”

    Although it was not specifically mentioned in the news release, the transaction could result in an immediate acceleration of Cirrus’s long-awaited Vision jet program. The single-engine jet project has stalled in recent years due to a lack of funding but Wouters has maintained throughout that an injection of investment capital would revive the jet. For its part, CAIGA says its focusing on the piston market with Cirrus. “We are very optimistic to begin our partnership with Cirrus and add Cirrus’s strong brand as the cornerstone in our aviation product portfolio,” said CAIGA President Meng Xiangkai. Cirrus was founded by Alan and Dale Klapmeier about 12 years ago and Dale Klapmeier is the current chairman. He said he was “thrilled” to make the announcement. “With this transaction, Cirrus will continue to develop and build the best, most exciting aircraft in the world,” Klapmeier said. “The original dream remains alive and well at Cirrus. We are just embarking on our next chapter on a global stage.”