UPDATE: Dassault Falcon to spend $60 million on Little Rock production facility | Arkansas Blog

Wednesday, May 29, 2013

UPDATE: Dassault Falcon to spend $60 million on Little Rock production facility

Posted By on Wed, May 29, 2013 at 12:59 PM

INVESTING IN THE FUTURE: So says AEDC Director Grant Tennille of Dassault deal.
  • INVESTING IN THE FUTURE: So says AEDC Director Grant Tennille of Dassault deal.
You'll find on the jump the official news release on the announcement today by Dassault Falcon that it will spend $60 million to expand and refurbish existing Falcon jet finishing facilities at the Bill and Hillary Clinton National Airport. This will accommodate completion of new versions of the business jet made by the company, which has been in Little Rock since 1975 and has employed as many as 2,000.

I have some questions out about city and state contributions to the project and what it means in terms of jobs. The facility had a layoff of around 100 jobs in 2009 and available figures differ on the precise payroll today. A state spokesman said yesterday that the important thing was, apart from any additional jobs, the stabilization of the future of the existing facility.

The work, to be completed by 2016, will add 250,000 square feet of new hangar space to 1 million already built.

UPDATE: There's no immediate projection on job creation. Arkansas Economic Development Commission Director Grant Tennille said the value was in preserving Dassault for the future in Arkansas and preventing the loss of jobs had Dassault decided to create a factory for its new jet at other locations that had competed for the work.

Tennille said Dassault employed 1,800 to 1,900 now, down from a high of 2,800 before the recession and other factors forced cutbacks. The company's $60 million investment will create a hangar with 14 bays for jet completion. He said that could add 300 jobs in two to three years. But if Little Rock had not been chosen for this facility, he said, it would have resulted in the immediate loss of 420 jobs.

The state will provide an annual rebate of cash to Dassault equivalent to 3.9 percent of payroll for the 420 jobs that are being retained for 10 years, he said. The state law allows such a rebate both for newly created jobs and for saving existing jobs. The company also will get $2 million from the governor's quick closing fund to assist in the work. Additionally, the airport is providing $43 million in incentives, mostly in the form of rent credits over the next 40 years on ground it leases.

"We are investing in the future," Tennille said. "Not just in Dassault, but in other businesses that service that facility." He noted several hundred jobs at a custom cabinetmaker in Jacksonville are tied to the aircraft industry.

He said the new investment will make Little Rock home to Dassault's largest single factory. "We felt like there was a real choice to make," Tennille said. "Either we were going to lock Dassault in here forever or we were going to pass on it and the attrition would begin."

UPDATE II: The AEDC's Joe Holmes follow-up in a note with a 10-year estimate for the value of retaining those 420 jobs. It's $7.8 million.

UPDATE III: Airport lease terms:

For the additional 1 million square feet, Dassault will be paying ground rent at .173 cents per square foot, per year for the next 25 years, which a CPI adjustment annually. The buildings will revert to the airport on year 26, in which Dassault’s rent will gradually increase to market value during the remainder of the term, a slow increase which equals a $43 million savings.

NEWS RELEASE

Dassault Falcon Jet plans to increase the size of its completion center in Little Rock, Arkansas to accommodate future Falcons, it was announced today at a press conference attended by Governor Mike Beebe of Arkansas, Senators Boozman and Pryor, Representative Griffin, Little Rock Mayor Mark Stodola and executives from Dassault Falcon Jet. Over the next three years, the company will invest $60 million in new construction and the refurbishment of existing facilities.

"Little Rock has been a major part of our company identity over the last 38 years and today is the company's largest industrial facility," said Eric Trappier, Chairman & CEO of Dassault Aviation. "It has become our worldwide center of excellence for primary completion activities and pioneered the use of digital design in cabin completion. The new investment will not only increase capacity but enhance the overall quality and efficiency of the products we provide to our customers."

"I like to say that a piece of Little Rock is always flying somewhere in the world because of the craftsmanship, ingenuity and dedication of our employees here," said John Rosanvallon, President and CEO of Dassault Falcon Jet. "I am glad that the Dassault Aviation Board of Directors gave the green light for this major expansion and want to thank Governor Beebe, the Little Rock Airport Commission and the Arkansas Economic Development Commission for a productive exchange that ultimately led to a win-win agreement for Dassault Falcon Jet and the State of Arkansas."

"Dassault Falcon Jet is a cornerstone of Arkansas's aviation sector, and today's significant investment will help cement that status for many years to come," Governor Beebe said. "This company is a big reason that aviation products are one of our top exports, and their Little Rock employees are a big reason Dassault Falcon Jet is committed to doing business in Arkansas."

Site preparation will begin in early 2014 and construction will take place through the early part of 2016. The result will be an increase of 250,000 square feet dedicated to production and completion activities. The project will also include refurbishment of the cabinet, upholstery and headliner shops along with upgrades to older hangars. The expansion will bring the total facility footprint to 1.25 million square feet.

The new completion facility will be state-of-the-art, with advanced tools and processes that shorten completion time and increase quality and accuracy. In 2010, Dassault Falcon Jet received approval from the FAA for the use of 3D data during the completion process, making it the first OEM to have approval for both 3D type design and completion. In addition to enhancing quality, this allows the opportunity for the customer to visualize the final configuration of the aircraft.

In 2012, Dassault delivered 66 Falcon aircraft, and expects that number to increase in the coming years.

History of Little Rock
In 1975, 'Falcon Jet Corp.' - then a Dassault Aviation/Pan Am joint venture - purchased Little Rock Airmotive, a 61,500 square foot hangar and office facility, and integrated it into its global production line. FedEx founder, Fred Smith, originally used Little Rock Airmotive as a completion center for the fleet of Falcon 20 transports that he used to launch his overnight delivery service in the early seventies. When Falcon Jet Corp. was looking for a completion facility, they discovered a group of workers already familiar with the Falcon product line. Making Little Rock even more attractive was its pool of highly skilled artisans in cabinetry, carpentry, leather goods, upholstery and a range of other related technical activities.

In 2008, Dassault completed a previous 116,000 square feet foot expansion at Little Rock with the addition of a new four bay paint hangar. That $20 million expansion grew the facility to a total of 897,000 square feet and also included a new production and design area, more warehouse space and a new flight line.

Dassault Falcon Backgrounder:
Dassault Falcon is responsible for selling and supporting Falcon business jets throughout the world. It is part of Dassault Aviation, a leading aerospace company with a presence in over 70 countries across five continents. Dassault Aviation produces the Rafale fighter jet as well as the complete line of Falcon business jets. The company has assembly and production plants in both France and the United States and service facilities on multiple continents. It employs a total workforce of over 12,000. Since the rollout of the first Falcon 20 in 1963, 2,200 Falcon jets have been delivered to 80 countries worldwide. The family of Falcon jets currently in production includes the tri-jets-the Falcon 900LX, and the 7X-as well as the twin-engine 2000LX, 2000LXS and Falcon 2000S.

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