When Bombardier executives highlighted concerns about a soft market for its Learjet products, speculation heightened about whether the company would sell the Learjet unit and whether its neighbor, Textron, might be the potential buyer. That speculation underscored the transition that already has occurred in Wichita since the downturn began in 2007, spelling the loss of thousand of jobs and translating into the merger of two giants in the general aviation industry.
Wichita alone lost 13,000 jobs over the 2009-2010 time frame, and an industry-sponsored economic study released in 2015 found that business and general aviation direct, indirect and induced jobs were down by 100,000 since the last time the study was conducted a decade earlier.
“The aviation industry had not seen anything like the damage that happened in 2008,” said Richard Aboulafia, v-p of analysis at the Teal Group, adding that Wichita became “the center of the pain.” This was because the majority of the general aviation manufacturers there have been focused at the lower end of the market, which was hit harder than any other sector, Aboulafia said. “The bottom half fell by 57 percent in the space of two years—a complete disaster the likes of which we had never seen in the aviation industry.” In the aftermath, everyone improved, “except Wichita,” he added.
“We’ve gone through a really difficult time—truthfully, the most difficult eight-year period in my career in this industry, and my career is now 40-plus years,” said Dave Franson, president of Franson Consulting as well as president of the Wichita Aero Club. “But I don’t feel there’s just no way we’re coming out of it. There’s just a new normal. But I have confidence in Wichita. I have confidence in the companies.”
Wichita has long prided itself as being the Air Capital of the World, home to Beech, Cessna, Learjet and Spirit AeroSystems and a base for manufacturers such as Boeing. Since the downturn, Beechcraft and Cessna have merged into Textron Aviation and Boeing has moved manufacturing out of the city.
But, according to the Greater Wichita Economic Development Coalition (GWEDC), a strong base remains that gives Wichita continued bragging rights as an aviation-manufacturing epicenter. Nearly 30,000 workers currently remain involved in manufacturing aerospace products and parts in the greater Wichita area, and companies in the region delivered nearly a third of all global general aviation shipments. In all, Wichita calls itself home to more than 350 aerospace companies.
The GWEDC also notes that, even after the downturn, Wichita still ranked first in the 100 largest U.S. metro areas in manufacturing as a percentage of overall jobs; and third in terms of engineering jobs.
The March 2014 Textron Aviation merger played into a resiliency of the local area, Franson added. “They have been able to take advantage of synergies. They found opportunities to put together talent and resource pools that were here in town,” he said. Before the merger, “[Cessna and Beechcraft] weren’t working together because they were competitors. Now they can take advantage of what we have here, and it is coalescing nicely, even to the point where it is more efficient.”
Aboulafia also credited the company’s continued investment. As an analyst, he said, “I’ve had reasons to be critical of Textron and Cessna, but I give enormous credit for the continued new product-development funding pipeline. Unquestionably new product development is the lifeline of business.”
Also feeding the success will be a strengthening in the North American market. While emerging markets fueled growth at the top end of the business jet market, “the growth we’re seeing now is a return of the North American model,” he said. “In the past year we are starting to see little signs of life at Cessna.”
Looking industry-wide, Pete Bunce, president and CEO of the General Aviation Manufacturers Association, added, “The fact that we have had some consolidation and the industry was able to keep moving forward is a testament to its resiliency.”
Diversification Is Key
Beyond the big manufacturers are a base of suppliers that had been dependent on the livelihood of the manufacturers. The lesson learned from the downturn, Aboulafia said, was diversification. “In Wichita you did have a dangerous level of reliance,” he said. But many of those companies adapted. “You still have a lot of companies with strong niche capabilities that started looking outside of Wichita and looking more globally.”
Franson agreed. “When things started to really deteriorate, there were obviously some concerns, some consolidations and some real difficulties,” he said. “But we have some pretty capable and clever companies here.” Franson pointed to Cox Machine, a company that this year is celebrating its 60th anniversary, and has been at the forefront of additive manufacturing. “Cox Machine has done a great deal in terms of staying ahead of the technological curve. It was doing things that were considered ‘gee whiz’…before other companies.”
He also pointed to McGinty Machine, which made sure it was available and could do what was necessary when it was necessary. “That sets them apart.” Just outside Wichita, GlobalParts.aero has expanded into manufacturing, he added.
These companies have been able to absorb some of the jobs lost, he said. Others have attempted to retain talent by shifting workers. Bombardier, which has been undergoing a series of layoffs as it tries to turn around its cash flow issues, also has been transitioning some of the workers from Learjet programs to other programs. These workers have been moved to other areas of Bombardier, where space could accommodate them.
Bombardier spokesman Mark Masluch said the transfers are part of an effort to “manage production costs” and remain disciplined. Similarly, Bombardier has leveraged its capacity in Wichita to expand other areas of its work, including last year’s expansion of global support in Wichita.
“They are not sitting on their hands,” Franson said. “They have the facilities, they have the capacity, they have expertise and they have a lot of good folks who know what they are doing.” Franson also pointed out the support they brought in that will service a range of aircraft. “They are not wringing their hands. They are using their hands.”
As with additive manufacturing (aka 3D printing), new technologies are adding jobs not only in Wichita, but throughout the industry, and emerging technologies such as hybrid or electrical propulsion have the potential to be a job enhancer, Bunce added.
Franson noted many new jobs have been created to replace lost jobs, “but they are different kinds of jobs. There are different roles being played over at the Learjet factory.”
Securing a Deep Talent Pool
The aerospace community in Wichita has remained active in solidifying its future, Franson said, pointing to the National Center for Aviation Training (NCAT). The Sedgwick County Technical Education and Training Authority developed the $50 million, 224,0000-sq-ft, facility, providing capacity for training at least 1,500 students in day and night classes. The community broke ground on the center just as the market was collapsing in 2008 and classes began in August 2010. The aviation community also donated surplus technology and equipment to fill out the training centers, and the GWEDC notes, “Between NCAT’s aviation building and advanced manufacturing building, an entire business jet could be made from design to finish.”
This has had real implications, Franson said, noting that the Wichita Aero Club recently awarded a scholarship to a person laid off in the downturn who now is working toward an Airframe & Powerplant license. The scholarship enabled this person, who has a family and is in his 30s, to continue the education. He also was hired by Bombardier. “We’ve got quite a few people moving through the education opportunities,” he said. This enables them to remain in Wichita and be trained for opportunities with the companies once they become available.
Having said that, Wichita has lost a talent pool. “We couldn’t keep all of the workers,” Franson added. That includes not only those on the factory floor, but also at the executive levels with many companies seeing new upper level management in recent years, Aboulafia added.
This talent pool is a focal point for the entire industry, added Bunce, who notes that companies such as Disney often lure away top prospects coming out of aviation schools such as Embry-Riddle Aeronautical University. Aboulafia expressed concern that the industry could face a “skills gap” with longer-term, older employees remaining and younger people coming in at the entry level. What’s been lost are the people in between, creating a need to ensure that there is a bridge in the skills gap.
While resilient, the industry isn’t completely recovered, the executives agree. In fact, Bunce notes, “The situation now is we have had a number of companies announcing workforce reductions.” He expressed concerns about the struggles of the so-called BRIC nations (Brazil, Russia, India and China), which were heavily relied upon to help recover from the downturn. “None of them right now are good for business aviation,” he said.
Bunce also is concerned about overall overcapacity in the global business and general aviation marketplace. “We’ve got too many airplanes out there chasing too few customers, which is driving residual values down,” he said. “When you have overcapacity and you are looking at too many airplanes, then you decide you don’t need to pump that many airplanes into the system and have workforce adjustments.”
Looking at the possibility of more consolidations, Bunce said, “I don’t like consolidations, but we have an overcapacity out there. We want stability and steady growth for the industry.”
He also doesn’t think a return to the years leading up to the downturn would be good for the industry. “Do we ever want to get to a point like 2007-2008 where people were flipping jets like they were flipping houses? Is that a real market? Or does that set us up for a boom-to-bust time. I don’t think it was healthy for our industry.
Aboulafia also noted the possibilities of the future of Learjet, saying the Wichita community could survive another consolidation resulting in a “duopoly” of major players in the light end of the market. “That’s one way of rationalizing in times [of] overcapacity,” he said. “Maybe industry will come back with lower costs and in a nimble way.”
And despite fallout of the downturn, Aboulafia believes Wichita retains a claim to the title of Air Capital of the World. “It’s a fantastic legacy. Even though the entire market has been hit, you still have a terrific collection of legacy names and products,” he said. “I thing it would be hard pressed for anyone else in the general aviation market to take that title from them.”
“Until someone tells me there is a new Wichita, I’m not too concerned we are going to lose the title,” Franson added, reiterating, “But there is a new normal. That’s a pretty obvious fact. We have to realize there’s a lot of work to do to maintain a leadership position. It’s a difficult process.”
