ALAN KLAPMEIER
“No, I’m not moving it,” he said of the collection that ranges from a British World War II Spitfire to a P-38 Lightning. “And we’re not moving jobs.”
In the wake of the Jan. 17 announcement that an “aggressive” financing package had spurred Kestrel to build a its new, single-engine turboprop plane in Superior, Wis., instead of Brunswick, economic development officials and politicians from around the state have offered suggestions about what Maine can learn from Kestrel.
But in an interview with The Times Record, Klapmeier said answering that question requires facts that were lacking, misrepresented or “chosen selectively” in numerous news reports and commentaries that followed his company’s decision to create those much-needed jobs in Wisconsin.
Klapmeier said Kestrel has provided Maine with a net financial gain, and that the company still plans to bring more business — and jobs — to Brunswick Landing.
Mainers don’t have to believe his words, he said: Kestrel will prove them true.
‘You better get the story straight’
"If you’re going to use Kestrel as an example for how economic development can be done, and should be done, then you better get the story straight, or you aren’t going to get the right lesson," Klapmeier said Wednesday.
In July 2010, Klapmeier joined state officials at the Augusta airport to announce a $100 million deal to manufacture its new, single-engine turboprop plane at the former Brunswick Naval Air Station.
But just more than a year later, he told The Times Record that he’d had difficulty securing financing from the state — financing he expected when he chose Maine for the project — including New Market Tax Credits, a complicated federal program through which private investors receive tax credits in exchange for investing in a company. Kestrel has secured those private investors, Klapmeier said.
Local, state and redevelopment officials scrambled to find other financing, but in October, Klapmeier said he had started negotiating with other states to find financing. In January, Kestrel announced it would build a 35,000-square-foot manufacturing plant in Superior, Wis.. — and not in Brunswick.
Klapmeier said that when fingers started pointing in Maine, most were aimed at him.
Headlines announced that Kestrel was “leaving” Brunswick when, in fact, the company signed a 10-year lease at Brunswick Landing and must, under terms of federal funding already received, maintain a presence here for seven years.
“The bulk of the manufacturing jobs are going to be in Wisconsin – that’s the way it is,” Klapmeier said. “But that doesn’t mean that all the jobs are in Wisconsin, and it doesn’t mean that we’re moving anybody who’s already here.”
Kestrel Aeroworks, based at Brunswick Landing, currently employs nearly 30 engineers, technicians and others, not including management or consultants — at an average salary of $68,470 — many of whom are working to move the turboprop design toward production.
Kestrel also has other plans for Brunswick — including new jobs, Klapmeier said. But he declined to announce those plans other than a new division, Kestrel Tooling, which he said would build molds for the planes to be shipped to Wisconsin and then assembled.
‘How do we make sure this doesn’t happen again?’
Klapmeier declined to speak on the record about what went wrong with the financing deal in Maine other than to say, “We were probably naïve. We trusted, and what we should have had was what we asked for in Wisconsin: ‘OK, list this and make sure there are some signatures along with this.’ We weren’t going to get to the point where somebody comes back afterwards and says, ‘Well, that wasn’t what we said.’”
He would not name specifically which organization he referred to “because it’s not helpful to understanding how to do this better in the future.”
But Klapmeier said Maine’s economic development officials should ask a number of questions including, “How’d we get ourselves into this situation? Who misunderstood what? The lesson still needs to be: How do we make sure this doesn’t happen again?”
What worked in Wisconsin — and worked quickly — were public-private economic development partnerships collaborating to secure $18 million in tax credits for Kestrel, coupled with state government’s commitment to work with the company to obtain another $20 million.
Klapmeier also disagrees with suggestions that Kestrel was “the wrong kind of company” for Maine to seek, and argued instead that more established — albeit lowerrisk — businesses simply seek “the best economic deal, and Maine is not going to be able to compete.”
Kestrel needed more financial assistance, he said, and, “There’s risk, yes — It may not happen. But for a relatively small investment … hundreds if not thousands of jobs can come out of that company.”
Finally, he said, Maine economic development officials must realize that “from a business point of view, no company needs to be in Maine except, maybe lobster fishing, but probably not even that because you can get to the waters from Massachusetts. So you better decide, well, ‘How do we get people to Maine?’ I submit that the way you start is by finding people who want to be in Maine.”
‘Wisconsin hasn’t been fooled’
Klapmeier acknowledged that the loss of the new manufacturing plant — and new jobs — to Wisconsin was a blow to Maine, but said he planned for Kestrel to be in Maine until it became clear the financing was in jeopardy.
“We chose Maine — perhaps naively, because we said, ‘If you can do this — this list of things — then we’re here,’” he said. “A collection of different entities in the state said ‘yes,’ and we moved into the building and started hiring people … When it became clear that it might not happen, we said, ‘Well, let’s look at our other options, and there were other places that were interested … what we never did was tell Maine, ‘Beat this offer and you’ll get there.’ It was all about timing. We have a business plan, we have a business schedule, and we’re off that schedule.”
Klapmeier said he takes “great offense” to implications “that I deceived people into this — that I fooled them into thinking we were going to do this project here … Well, Wisconsin hasn’t been fooled. They can look across the river (to Cirrus Aircraft Corp., which Klapmeier cofounded) and see thousands of jobs. It isn’t that hard for them to picture. It didn’t take a lot of imagination (for them to say), ‘We know these guys, we know what they can do.’”
Kestrel continues to pay taxes to the state and an average salary of $68,470 to Maine employees, Klapmeier said, and the company paid an undisclosed amount in fees to a Maine company — he declined to name the company — during the financing process — overall “a net gain to the state of Maine.”
To skeptics who wonder about the marketability of his new plane, Klapmeier said he hasn’t begun to accept deposits because Kestrel has no firm price or delivery date.
“Call it arrogant, but I know it will sell,” he said. “I know lots of people who want to buy it. It’s just not a concern. We don’t need to take deposits to convince us … and there are things about it we’re not interested in telling the competition yet. We’re very confident that before the airplane enters production, we will have more than the next 12 months — and probably the next 24 months — of the airplane sold out.”
‘We’ll prove it later’
Kestrel representatives met early last week with town officials at their request to reassure them of the company’s commitment to Brunswick and to explain where $300,000 in Community Development Block Grant funds — actually federal funds filtered through state government — are being used, Klapmeier said.
The state of Maine has invested $417,000 in Kestrel, including another $117,000 in reimbursement from the Midcoast Regional Redevelopment Authority.
“Did they get $ 417,000 worth of benefits?” Klapmeier asked. “I think the answer, objectively, is yes, but that’s just the break-even point of view. But what’s worth doing, the break-even (project), or the chance for lots of jobs … high-paying manufacturing jobs?”
“What we’re going to do is prove to the people of Maine that this was a good thing for them,” he said. “But we also recognize that telling them that right now is not going to work. That’s OK — we’ll prove it later.”
bbrogan@timesrecord.com
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