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Northland has become friend to the friendly skies

Editor's Note: In our continuing Winds of Change series examining the Northland's economy, we take an in-depth look at the aviation industry. The future of aviation in the Northland sits just off Highway 53 on the upper edge of Duluth. It can als...

Editor's Note: In our continuing Winds of Change series examining the Northland's economy, we take an in-depth look at the aviation industry.
The future of aviation in the Northland sits just off Highway 53 on the upper edge of Duluth. It can also be found at the Technology Village, in classrooms at Lake Superior College and with the world's fourth biggest commercial carrier.
Though its eyes are lifted toward the future, aviation is an industry rich in local history. Early Northland endeavors grew to a strong economic presence and promise "the sky's the limit" for tomorrow. One example is Mesaba Airlines, which flies as Northwest Airlink. It was started in 1944 in Coleraine.
{IMG2}The industry also has a rich military legacy that represents pride, opportunity and past economic frustration. The Air National Guard is now one of Duluth's biggest employers, but the Air Force base that closed in the early 1980s helped put the area in an economic tailspin.
In northeastern Minnesota, aviation employs an estimated 2,050 workers and benefits numerous supply, service and construction companies. Statewide in Wisconsin the industry supports more than 41,000 jobs. Jobs range from technicians who build and fix planes to travel agents, freight handlers, airport personnel, pilots, ground crews and assembly workers.
Aviation plays a role in local tourism, both attracting and transporting visitors. An air show packed the city of Duluth for a weekend last summer, while Superior is expecting a tourism boost from the Richard Bong Heritage Center.
The industry has received considerable public investment to recruit businesses while being competitive for new opportunities. There is also an ongoing need for facility upgrades as communities promote their air accessibility.
There have also been investments in security. In the wake of Sept. 11, the Chisholm-Hibbing Airport spent about $700,000 on security improvements and Duluth spent $490,000. Wisconsin has asked the U.S. Department of Defense for $5.5 million to help pay for security needs, on top of $4.4 million in state air security money and additional federal funds.
Government officials and economic development experts keep aviation and related companies in their cross hairs as the Northland works to diversify its job base and shift into the new economy.
In addition to Duluth International Airport which anchors area aviation, more than a dozen communities have local airports. Some have commercial service. Others, like Superior and Carlton County Airport, have flying schools and cater to corporate aircraft.
Upgrades at the Duluth airport have been ongoing, to the extent that weather is hardly a factor anymore. It is part of the Duluth Airport Authority's proactive approach to economic development through building the aviation industry.
"It's logical for us in Duluth," said Mayor Gary Doty about recruiting aviation firms and related businesses. "The aviation industry generally pays very well, the kind of jobs people can feed a family on -- good clean jobs both for the employees and the environment."
The mayor has made aviation a centerpiece of his administration's development efforts. It is one of the key sectors in the ongoing work started at November's economic summit.
A better mousetrap
For motorists on Highway 53 in Duluth, there is no sign saying that behind the big golf ball tower off Airport Road sits one of the hottest flying stories in the nation.
But since the first customer flew off in an SR20 in 1999, aviation journalists and business writers have beaten a path to the Cirrus Design plant in Duluth.
It was a heady story for a segment of the industry where growth and enthusiasm tracked flatter than a runway. Suddenly, amidst all the emerging dot-coms and globalization of the 1990s, came two brothers -- Alan and Dale Klapmeier -- from Baraboo, Wis., who planned to build and sell fiberglass airplanes in Duluth.
And they weren't just low-end, one-prop puddle jumpers but safe, sophisticated, innovative aircraft that promised speed and comfort in a sexy, high-tech package. Planes that came with a giant parachute -- just in case. Planes that were fun and easy to operate.
The concept sold. Along with the writers, customers came and got on a waiting list that once topped 600 and still hovers around 500 backlogged orders.
In 2000, Cirrus rolled out the more powerful SR22 and upped production from two planes a week to one plane a day. The company is now in the process of doubling that and strategizing on how to ramp up to three planes a day.
The 100th SR20 went out the door in December 2000; nationwide, 1,813 single engine planes were shipped by the entire domestic industry. Currently, about 400 of the Duluth built planes fly the skies around the world.
Cirrus is also developing the SR21, a plane for the European market powered by a turbo-diesel engine to avoid sky-high gas prices.
In 2001, Forbes Magazine named Cirrus "best private airplane," citing its Lexus-like interior and simplified controls. That same year, author James Fallows told the Cirrus story in his book "Free Flight." The book, like many of the aviation trade articles, dwelled on the company's location in northern Minnesota.
On its fast climb, Cirrus has hit some turbulence and occasionally had to correct its course. As company spokesperson Kate Andrews pointed out, building planes is labor intensive and very expensive. It is also tightly regulated
She explained every part has to be FAA certified, a big effort for Cirrus, which has designed and built most of its plane components in-house. Many of its other precision parts are actually manufactured in the Northland. "We're our own biggest supplier," Andrews said.
Overall, developing, certifying and getting that first plane out the door cost the young company an estimated $75 million.
Since the mid-1990s, Cirrus has defined economic development in Duluth. The company came to Minnesota in 1994, as Duluth beat out Grand Forks, N.D., for the assembly plant.
And though many Northlanders were skeptical about a small, unknown company that was going to build small planes, Doty and his economic development team embraced the concept.
Between 1995 and 2000, Cirrus received about $2.4 million in assistance money from the Duluth Economic Development Authority and other local funds. plus a loan from Minnesota Power.
For its part, Cirrus provided an increasing number of jobs. It expanded operations in Duluth, opened a manufacturing plant in Grand Forks and a small paint operation in Hibbing. It also continued to wow the aviation press.
By late 1999, Cirrus employed more than 300 people. And that year the anticipated SR22 had the aviation industry buzzing.
Cirrus started the new decade on a seemingly nonstop flight to success. Various production and certification milestones were ticked off and the number of employees soared.
But the business burned cash. In his book, Fallows wrote, "From the time the company was founded .... to the delivery of its second kind of airplane ... they always needed money."
In February 2001, a course correction was needed and Cirrus laid off more than 100 workers. But even after the cuts it still employed 512 and carried 639 backorders.
In July, Cirrus delivered its 200th plane. In August, the company made news that caught both the aviation world and the community's attention. In a story first reported in the Budgeteer News, Cirrus announced a financing package from an outside investor worth $100 million.
Cirrus now had breathing room and the opportunity to focus on building more planes. But that announcement had barely sunk in when Cirrus made the news again. The city received a $3.45 million grant to help build an aviation incubator facility that will house the Cirrus expansion.
The project's total price tag was about $6 million. Tax increment finance bonds are being used to pay for the balance. The 63,000-square-foot facility is under construction at Duluth airport, adjacent to the existing Cirrus plant.
Cirrus's total airport campus will represent an investment of about $8 million and adjacent land is being evaluated for future expansion. However, poor soils have made construction costs higher than anticipated, and the amount of water available for fire protection has raised insurance concerns.
Doty said they will be working with Cirrus and the airport authority to put together a plan for the company's expansion. He believes one of the ways to make sure Cirrus stays is to have millions invested in property, buildings and people.
Last year, Cirrus announced it was hiring more workers. By November it had 420 employees in Duluth, 17 in Hibbing and 158 in Grand Forks.
The company currently has over 500 workers in Duluth, 30 in Hibbing and 220 in Grand Forks. According to Cirrus vice president Bill King, hourly wages are between $10 and $18 dollars an hour plus benefits.
Selling Cirrus planes
While the non flying public might think Cessna and Piper are the biggest threats to Cirrus' success, the company sees it differently. This helps explain the excitement in the industry caused by the plane built in Duluth.
King classes Cessna, Beechcraft and Piper as "manufacturers producing a dated product." And even as they roll out new models, he said, Cirrus does not believe they will be viewed as "significant competition in the years to come."
Last year, New Piper Aircraft, which makes several models in the same price range announced a plan to double revenues by 2005.
The General Aviation Revitalization Act of 1994 eased the liability burden of small plane makers stimulating the industry. It benefits the old line companies, as well as Cirrus and other newcomers.
King acknowledged these emerging marques -- like Diamond and Lancair -- as another form of competition but believes the market is large enough to handle them as well as Cirrus.
What Cirrus views as its strongest competitors are the other high ticket items consumers might spend discretionary income on, such as boats, luxury cars, etc.
"An aircraft purchase, while giving the consumer an incredible range of flexibility in his or her lifestyle and leisure travel options, is after all, a discretionary purchase," King said. "We understand this principle."
He said the new pilot consumer comes into aviation with an entirely new perspective on the value of aircraft compared to yesteryear. This new consumer approaches the purchase of an aircraft like any other high end product.
With this in mind, he said, Cirrus has taken an automotive-like approach to deliver a product that is quiet, comfortable, efficient and safe.
King believes Cirrus airplanes meet that criteria and in many respects are setting a new standard.
His optimistic outlook is shared by Ray Klosowski, executive director of the Duluth Airport Authority.
"Cirrus has the potential to do for Duluth aviation what Cessna did for Wichita," Klosowski said. "It's a great airplane; people really like it."
Sinex keeps 'em flying
Economic development pros dream about attracting high-tech start-ups with sound ideas. So when Duluth hooked up with a technology firm developing aviation maintenance software, excitement ran high.
Sinex Aviation Technologies was founded in 1999 by Barry Sinex, a veteran aircraft maintenance mechanic who had been working on the concept for several years. He also had experience as a pilot and programmer, and he had worked in the aviation service business.
Sinex saw the need for a better way to track aircraft maintenance from the mechanics on the floor on up. He envisioned a paperless process using software combined with Internet and intranet technology. It would replace the traditional airline system of task cards and mainframe-based software systems.
For mechanics on the floor, it means having a wireless PC, PDA or bar code reader along with their other tools.
The company grew with local financial help and cooperation from the Duluth airport, where it was first located. Early this year, it moved to the Duluth Technology Village and announced plans for expansion.
Sinex provides a suite of software that allow maintenance crews to make the most of their time, while providing the airline with better control and accountability. Sinex believes his software solution can save an airline millions of dollars in annual costs.
The airline industry is down and probably expects to be down for the next year of two, explained Sinex director of communications Peter Miller. So they are focusing on improving operations.
"Maintenance is a big part of what they do, assuring the safety and reliability of aircraft," he said. "We provide a product that helps them do that better then it has ever been done."
"We have now grown to 40 employees," Miller said. "We have the opportunity in the next two years to be up to 200 employees, in software development, project implementation and consulting."
"The company's opportunities are tremendous," he said. "We're being told by the industry that we have the right product to meet their needs."
An article in Aviation Week and Space Technology explored the role of software in airline maintenance repair and overhaul (MRO) and predicted a bright future.
He said Sinex has a narrowly defined market, with a two to three year window that includes passenger and freight carriers and the military. One client is USAir. However, confidentiality agreements preclude the company from discussing most current or prospective customers by name.
"They say it's a competitive advantage," said Sinex president and CEO John Miller. He explained the product is customized to each airline's needs, the hardware is positioned and the personnel trained.
Miller said his biggest fear in rolling out the product was that the mechanics wouldn't accept it. But the response has been just the opposite. The software eliminates certain tasks that detract from their actual work.
Miller was also surprised at the outset when he learned no one else was offering a product that provides the same service.
The nature of its business requires that Sinex have 24/7 service, but Miller said, "We're like the Maytag repairman, we don't get many calls."
He said they moved to the Tech Village after expanding as much as possible at the airport. Sinex currently has 10,000 square feet in the downtown building and will be adding another 5,000 in a couple of months.

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