Earlier this year, Duluth-based Cirrus Aircraft named a new CEO to lead one of Duluth's largest employers.
Zean Nielsen replaced founder Dale Klapmeier earlier this summer. The News Tribune interviewed Nielsen last week to learn how the first months have gone, how he views Cirrus' place in the aviation industry and the company's relationship with Duluth.
The interview has been slightly edited for grammar and clarity.
You joined Cirrus as CEO this summer. How have the first few months gone?
It's been great, actually. The transition from Dale to me and the inauguration into the leadership team has gone fantastic. … And it's crazy to think it's only been four months or so. It it feels like it's been four years of things we've accomplished.
The immediate focus for me has been around executing the current plan. Obviously, we have the board and the financials and so forth that we need to deliver on. And so that's obviously very important that we don't lose any sort of momentum during that transition, which is now complete.
Now in the last couple of months, (the focus has been) more so on strategy: Where do we want to be as a company in 10 years? And when I say strategy, for me, that means where to play and how to win. So basically, what markets what business models, what types of aircrafts — all those sorts of things, we've spent a couple months now working our way through.
As CEO, what are your priorities and why?
Speed of execution is incredibly important. … Speed of execution, I think, will become a competitive advantage. And it's certainly something that I've sort of brought along from my background that at Tesla and James Hardie and Bang & Olufsen. If you can do it faster than the competition, you get to reap the rewards of it and create sort of a moat around your business.
I'm big on communication. I'm big in the beginning here (on) getting into the weeds to make sure that all stakeholders are aligned. … As you take the company through those exercises, you align the company — and when folks are aligned, speed increases.
In just a few sentences, can you share with me the status of the aviation industry right now?
I think our market opportunity is along the lines of the old saying that is: “The best way to predict the future is to create it.” … We have to make (flying) easier, more affordable, more comfortable, safer, readily accessible, all those sorts of things. And then once you do that, there's a whole market that will start to exponentially grow.
The economy is still strong. And when the economy is strong, people buy things, and they buy capital equipment. … For us, the market is buoyant, it's good. But for the future to be bright for the entire industry, we have to create more pilots.
The industry is no different than it was five years ago … but it is limited in its current form. We already have almost 50% market share. So for us, the important part is to grow that pie and get more people flying.
Do you think Cirrus has already changed how people think about their aviation experience?
With the introduction of the parachute from the very first plane that we made … that has changed people's perception of flying. Because in the sort of unexpected event that something should happen — either to the pilot or the engine or to the plane — you have that sort of ultimate safety feature. You can pop the shoot. … Now people that are not necessarily flying every single day or professional pilots feel safer.
The other bit is how Cirrus approaches the next piece of that equation, which is flight training and certification and so forth. And today, if you buy a Cirrus used off the secondhand market, we still offer a full training program called Embark for that customer, even though we didn't make money selling the plane to them to begin with. But we want to make sure that they are safe.
I do think that we have changed what general general aviation looks like. … And I think we’ll be the one to disrupt it again, like the best way to sort of grow your company is to not be afraid of disrupting status quo. … And that will be (through) more safety features (and) convenience features.
You touched on this a little bit already, but what are the major challenges facing that aircraft manufacturing industry today?
General aviation is … a finite business. So because of that, the unit numbers are pretty small. I think last year we sold somewhere around (443) planes. And if we are dominating that space — or at least in that category — you can imagine how small the numbers are for our competitors.
To actually get any sort of economy of scale is difficult. So that's something that everyone sort of struggles with: How do you find stable and quality suppliers that can help you grow but are OK with smaller numbers? As opposed to the auto industry, when you can easily make 100,000 cars. … So it's a little bit more limited, in the (general aviation) industry.
I'm curious how Cirrus has mitigated some of those challenges.
Part of it is, we try and partner really close with the supplier. So they do invest in equipment, in (research and development) and so forth — along with us. We try and create a longer sort of contract with the suppliers, so they have clarity for the future, as do we. We sort of commit to each other as one way of mitigating it. And then just being a good partner, like pay your bills on time, be very clear about what your quality standards are, and be there for them so they can be there for you when you need them.
I wanted to ask about Cirrus' relationship with the community of Duluth. How do you view your company's role in the community here?
Cirrus wouldn't be the Cirrus that it is today if it wasn't a community effort. … We now have more than 1,000 employees in Duluth alone. … We wouldn't have survived the last three decades, had it not been for for strong support — not only from local politicians and officials, but also our employees. So we're good for each other, in that sense. I think we now have in the excess of 750,000 (square) feet of buildings in the Duluth area. And I think we pay more than $1 million in property taxes now, so that's also good (to be) a good steward of local economy. … And whenever we have needed the city and vice versa, we’ve been there for each other.
It's been well reported that the aviation industry is facing a shortage of mechanics. And so I was wondering if that's something that Cirrus has experienced as well.
We need engineers. We need mechanics. We need production people. We need pilots. We need literally hundreds of people every year at the rate we're growing right now. And mechanics (are) obviously in short demand for a lot of reasons. All the industries pull them from our industry. But it's obviously difficult with a 3.5% national unemployment (rate) to find talented people. People either are happy where they're at or not interested in moving and so forth.
The good part of it is that I think we have a really strong brand. We have a great culture within the company and a good reputation amongst employees — for both current and past employees. So we have not run into sort of that cliff where we can’t attract people. But certainly it requires more work to find really talented people to join as we scale because our appetite is bigger now.
Ten years down the line, where do you want Cirrus to be?
Worldwide. We want to keep growing. Now, the (general aviation) market in the U.S. is, naturally, the biggest — not necessarily because of the various manufacturers here, but the airspace and the infrastructure in the U.S. is really well built out.
Europe is a significant part of our business today, but we think it can be bigger. And then there is China, which currently the airspace in China is restricted. So nobody flies (general aviation) in China. The opportunity in the Chinese market is more around consultation and training and those sorts of things — basically helping them mature that market. That's where you sow seeds that hopefully you'll reap the benefit of 10 years from now.
We definitely want to grow, and we have really big aspirations for how big the company can become. And so far, I don't see — barring any sort of catastrophic events, with the economy and the trade war and whatnot — I don't see a reason why we can’t control our own fate in that sense.
Was there anything else you wanted to add in or emphasize?
I could not have wished for a better start. I pinch myself. I've already gotten the (flying) bug. I'm becoming a pilot myself now. And it’s difficult to find time to actually take the classes and fly enough while running the company at the same time. But I am in love with the company and the culture and Duluth and the people here.