Sunday, July 31, 2016

Soaring together: Local ‘aviation cluster’ grows up around Cirrus

Brian Hanson reflected on Miami 2011 as if he was an athlete, having played an instrumental role in a big game.

He and a team of Northland business delegates had descended on a staple aviation industry trade show, MRO Americas, and worked from pink sunrise to orange sunset.

They had an empty maintenance hangar some 1,800 miles north in Duluth to fill, and the local contingent saved their pitch meeting with AAR — a global aircraft services company — for last.

“That was on purpose,” said Hanson, president and chief executive officer for APEX, a private-sector economic development agency in Duluth. “We got a little smarter from the first 20 meetings.”

Built specifically to maintain a fleet of Airbus aircraft, Northwest Airlines had abandoned the 187,000-square-foot facility during bankruptcy filings in 2005.

Save for a 2008-09 stopover by Cirrus Aircraft on its way to permanent headquarters and production facilities across the Duluth International Airport’s main airstrip, the hangar sat as empty as an echo chamber.

The recession had hit, causing Cirrus to curb production steeply and turn its energies inward toward innovation. Other aviation manufacturers and suppliers in what is called the aviation cluster in Duluth drew down production, some to a trickle. What had been a burgeoning aviation sector was suddenly either getting by, scrambling to diversify or both.

One of those suppliers was SCS Interiors. SCS doesn’t make Cirrus Aircraft seats, but it wraps the foam and upholsters the seats. During a recent tour of their new facility near the airport, SCS workers hand-checked their leather to identify and keep out defects.

SCS President Mike Hudyma doesn’t like to talk about the recession anymore — “We’re a successful company,” he said — but the hard reality was that during its roughest patch the company housed only a handful of employees.

It was that stagnant business climate that made up the backdrop to the Duluth group’s trip to Miami. Their pitch was followed shortly after touchdown back home in Duluth by a phone call from a top AAR executive, expressing interest in the hangar. Within months, AAR’s recruiting staff was scouting a local job fair designed to show the company the skilled workforce awaiting them in the area. AAR left with 400 leads on employees, including many Federal Aviation Administration-approved airframe and powerplant certified mechanics who’d formerly worked for Northwest. 

That cinched it. Moving into Duluth’s biggest commercial hangar in 2012 served to tie the room together, so to speak, for the local aviation industry — filling a large maintenance void to go alongside the manufacturing, military and air service industries that were emerging from the recession.    

“AAR was probably the biggest deal I’ll ever do,” Hanson said. “I was lucky to quarterback that team.”  

Quantifying the ‘cluster’

Centered mostly in Duluth and concentrated largely around the airport, the local aviation cluster features more than 30 businesses and enterprises. Outside of longstanding staples such as the Duluth International Airport and Minnesota Air National Guard’s 148th Fighter Wing, most of it has taken wing in the 22 years since Cirrus Aircraft moved to Duluth from Baraboo, Wis.

“If Cirrus had not have moved here,” said Dan Larson, president and owner of parts manufacturer Hydrosolutions of Duluth, “there would have been no reason to locate here.”

Instead, the local aviation industry grew up around Cirrus, which does business with many of the local suppliers and manufacturers.

According to a University of Minnesota Extension office report in 2013 commissioned by the local businesses, the aviation cluster combined to pay about $270 million in wages in 2012 and produced nearly $1 billion in economic output that same year. Those numbers were up from $207.6 million and $861 million in 2008. 

While no more recent data exists, the current numbers only figure to have grown as many of the local entities have expanded their infrastructure and added staff in the years since it was issued. To wit, in the same 2013 report, 75 percent of the aviation-related businesses in the Northland indicated they’d increased sales since 2008. 

To date, the report stands as one of the only documents that attempts to quantify the impact of an aviation cluster that has taken wing since Cirrus’ move to Duluth in 1994. 

So much of what is known about the aviation cluster has focused on the individual entities within the cluster — the deployments of the 148th Fighter Wing, the Northwest-AAR saga, the addition of aviation-related curriculums to local trade colleges, the rise of Cirrus into a worldwide leader in personal aircraft, the 2015 completion of the airport terminal renovation, and much more.  

It wasn’t until 2009 that the individual components of the local aviation cluster acted on their own behalfs to create what’s called the Northern Aero Alliance.

What started with Larson wrangling together nine other like-minded members is now more than 30 businesses and organizations. Its members meet six times per year to trade contacts and share information about their roles in the industry. Eschewing the cutthroat nature of business, the alliance has forged a compact in which its members agree to support one another’s success. 

“I haven’t met anyone that’s not a genuine person,” said Sue Boudrie, the operations manager for Ikonics who was recruited into Duluth from a career in aviation to oversee Ikonics’ growth as a producer of sound-deadening acoustic liners for use in jet engines. “We’re all out to work together and help each other out when we can.”

The 2013 survey bore that out as 64 percent of the companies in the local cluster say they purchase “inputs” locally from one another, and 54 percent said they would like to buy more inputs locally. 

‘He was so impressed’

Since she started her business, GreyStar Electronics, in her kitchen in 1993, Mary Moldenhauer has grown her company into one that boasts $2 million in sales.

“I think we’ll maintain that in 2016, but it’s hard; it’s very competitive,” she said. “My niche is everything done here has to be done by hand.”

GreyStar was just awarded a state grant that will allow her company to do business in China.

Having been a longtime contractor with Cirrus — populating circuit cards with wires for Cirrus’ first two aircraft, the SR20 and SR22 — Moldenhauer figures to use Cirrus’ contacts within its Chinese ownership to ask them about the lay of the land.

“I want to know from them, ‘Who do you deal with?’ ” she said.

A pioneer in the local aviation community, she was inducted into the Minnesota Women Business Owners Hall of Fame in 2014, but, even at 66, is in no hurry to call it a career. Moldenhauer might be the only person in what is still a relatively young aviation cluster to have called the late Duluth business icon Jeno Paulucci a business partner. Paulucci housed her fledgling company on the second floor of one of his Canal Park buildings.

“I talked him into buying 11 percent,” she said. “He would come up at night and go look in the back area. He loved seeing all the testing. It was dark and we would have all the lights on in the test bed. He was so impressed.”

The story of aviation industry growth in Duluth is rife with anecdotes like that — moments in time as pieces that served the rise of the whole.

None was more fortuitous than Cirrus’ decision to move to Duluth.

Having grown out of building airplane kits, the company was poised to start production on its first aircraft.

Bill King, executive director of business development, made the move to Duluth with the company and recalled the impetus for the move while standing in front of a framed photograph of Cirrus’ original digs at the Baraboo-Wisconsin Dells Airport.

Part of the space in the photo was filled with employees’ cars — a fact that upset the local airport authorities. They wanted a pastoral airfield, King said, one populated with planes and hangars, not overrun with automobiles.  

“(Founders) Alan and Dale Klapmeier built a little lean-to and got up to about five simple structures with 30 cars in the field,” King said. “Now we’ve got 1,300 (employees).”

‘Talent at every level’

A tour earlier this summer of the Cirrus assembly plant with King revealed glimpses at the innovation being fostered locally in the aviation industry.

The Vision Jet, nearing final FAA approval, is in production and figures to revolutionize jet travel. Not a private jet requiring a professional pilot, the company has billed it as the “personal jet” for the way it will allow the owner to fly it.

“I have a jet on order,” said Don Monaco, owner of nearby Monaco Air. “I have my place number: No. 20.”

A raw fuselage for the Vision Jet rested on the factory floor — one single carbon fiber orb and tail, replacing what historically in aviation had been pieces of aluminum and “a zillion rivets,” King said.

Even Cirrus’ single-engine planes start assembly with two composite right-left halves. But for the jet the company’s research and development created a molding process that can be removed from the inside once the fiber settles around the mold.

“We’re doing some pretty exotic stuff in terms of design,” King said, later showing off the edge of a wing that features hundreds of tiny pores through which is secreted a de-icing solution.

Cirrus’ innovation even reaches shipping and handling processes — having created in-house rolling racks for transporting rows of propellers that used to have to be painstakingly packaged one at a time and wrapped like a dead Egyptian pharaoh.

It was the “guys on the floor” that came up with the propellor racks that slide nicely into the back of a semi trailer, King said, adding, “We’ve got that kind of talent at every level.”

What the local aviation cluster needs now more than ever is more of the same.

Cirrus posts billboards around town calling for new workers.

SCS Interiors is always looking for people with proficiency in sewing.

At AAR, where they strip hulking passenger jets down to the bones and perform everything from preventative maintenance to reupholstering to engine repair, Vice President of Operations Mark Ketterer said, “If I had it my way we’d get 300 more jobs in here. That’s really what it’s about: finding talented people.”

Help would appear to be on the way. Last spring, Lake Superior College graduated its first 16 students from its new Center for Advanced Aviation at the Duluth International Airport.

Years ago, the school had purchased the program’s infrastructure, including an entire inventory of engines, from Winona State University, which divested itself of aviation. The program sat in crates for several years, and it was members of what would become the Northern Aero Alliance that urged the school to push its program through the accreditation process.

“I heard it from them,” said Jenni Swenson, the school’s dean of business and industry. “They would explain the growth. Knowing we had the equipment, it all kind of aligned.”

The future of the aviation industry in Duluth depends in part on its ability to attract employees. To that end, the Northern Aero Alliance conducted its own report earlier this year, identifying almost 40 types of workers it will need to attract to maintain the viability of its members. The list includes everything from office staff to flight trainers to welders to computer-aided designers to engineers and electrical aviation mechanics.

“You create a demand by making quality components with repeatability,” said Hydrosolutions’ Larson, outlining what has been the recipe for success throughout the local aviation cluster. “You can’t be a Joe Schmoe and be competitive.”

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