Ikonics looks to grow, but where?
Ikonics Corp.’s aerospace work is a small percentage of the Duluth-based company’s business.
To keep up with an expected demand for its cutting-edge, sound-deadening liners for jets, the imaging technology firm is considering building a second manufacturing plant.
The question is where — Duluth, Mexico, Ireland or Kentucky?
The $8 million, 30,000-square-foot facility would be used for the company’s burgeoning aerospace division, creating 30 to 50 well-paying jobs, including engineers and operators of computer-aided robotic equipment, said Bill Ulland, the company’s CEO, president and chairman.
That’s dramatic growth for the publicly-traded company that now has 70 employees, most working at the company headquarters on Grand Avenue in West Duluth.
Ikonics officials say they would prefer to build next to their current manufacturing plant and warehouse at the Atlas Industrial Park in Morgan Park.
But three major aerospace companies want Ikonics to build near their aircraft assembly plants in Mexico, Ireland and Kentucky. To sweeten the lure, they are offering to help finance the project through joint ventures or licensing agreements.
The issue for those three companies — all major jet engine manufacturers — is the shipping back and forth, said Ulland, who declined to identify the companies.
“In their ideal world, we would be making the liners right next door,” he said. “That’s not our ideal world. We prefer to do it in Duluth — it’s more efficient — and ship to their various facilities.”
Industry taking off
All of this is being driven by an anticipated industry surge.
The demand for Ikonics’ acoustic liners fashioned out of composite materials may increase in late 2014 and ramp up in 2015 as new passenger jets — including new Airbus and Bombardier planes, which are using Ikonics’ products — begin commercial service.
Ikonics has worked with aerospace companies in the pre-certification, testing phases of the planes’ development. That propels Ikonics into preferred vendor status when the industry, literally, takes off.
But to ensure getting that aerospace business, Ikonics needs to demonstrate that it has the technical and manufacturing capability to fill the growing orders, Ulland said.
So for starters, Ikonics’ board of directors recently approved spending $570,000 for more automated equipment to boost the company’s composite machining capabilities for the aerospace industry. The additional equipment will take up the remaining space at Ikonics’ existing 35,000-square-foot plant in Morgan Park.
That’s Phase I.
If the company decides to build a second plant, Phase II would be its construction. If Duluth is chosen, it would be constructed near the current plant on several additional acres that Ikonics bought from the Duluth Economic Development Authority a few years ago.
The $8 million price tag would include the computer-controlled robotics needed to ramp up production of the company’s aerospace products.
“This would be a major investment for Ikonics,” Ulland said. “It boils down to whether we will do it or not. We need to evaluate the risk, economics, financing and other location options carefully. The economics have to stand.”
To build in Duluth, however, Ulland said the company may need some help. So company officials have begun to seek some public money.
Chris Eng, DEDA’s executive director, said the city is ready to help the company that has called Duluth home for more than 50 years.
“We will be very interested in assisting them,” Eng said. “We want them to build in Duluth.”
The best bet, he said, is the state’s new Jobs Creation Fund, which is replacing the JOBZ program to spur economic development. The new program provides financial incentives to businesses that create a targeted number of jobs. Eligible companies can get up to $1 million for creating and retaining high-paying jobs and building or improving their facilities.
Heidi Timm-Bijold, the city’s business resources manager, said Ikonics’ commitment to Duluth was clear when it bought 11 acres from DEDA, more land than it needed, in 2008 to build its manufacturing plant. That’s because, the company was looking ahead to future expansion.
“On top of that, they have an option for another four acres,” she said. “When you look at that, this Duluth-based company wants to stay Duluth-based.”
Either way, Ikonics officials will decide this year.
“We’re leaning towards Morgan Park,” Ulland admitted. “We can do better in Duluth at a lower cost.”
If it is Duluth, construction would begin next spring with completion in fall 2015. Besides jobs, the additional plant would bolster Duluth’s status as an aerospace hub, he said.