WEDC threatens legal action against Kestrel Aircraft

The ultimate deal maker and job creator, Governor Scott Walker, watches while one of his earliest high profile deals is falling apart. From the Wisconsin State Journal:

A day before Democrats submitted a petition to recall him in 2012, Gov. Scott Walker flew to Superior to announce a $20 million award for an aviation start-up promising to create 665 jobs and to invest more than $50 million in the state.

Five years later, Kestrel Aircraft has defaulted on its loan repayments after investing $1.4 million and creating 25 jobs, and the Wisconsin Economic Development Corp. says it is initiating legal action against the company.

The sour Kestrel deal is the latest reminder of how hasty decision-making and loose financial controls in WEDC’s early days have cost taxpayers. And though the agency has put in place several safeguards since 2013, the early missteps continue to dog WEDC as it negotiates the largest taxpayer-backed corporate incentive deal in U.S. history.

Unlike Foxconn, one of the largest manufacturers in the world, Kestrel came to Wisconsin as a much riskier start-up company, having only built a single prototype for a new six-seater turboprop jet. The design and production had yet to be certified by the Federal Aviation Administration, a process that can take three to five years.

Investing in a start-up aviation company was a much riskier proposition than a typical start-up, said Bill Bower, a retired aerospace engineer from Albuquerque, New Mexico, where Eclipse Aviation went bankrupt in 2008 after trying to build an aircraft similar to Kestrel’s with more than $500 million in investments.

“If you had a bunch of people on the state board looking at this and there was nobody who really knew anything about the aircraft business they might get all starry-eyed and thinking this is like getting into show business,” Bower said. “If anybody on that board had talked to anybody in the aviation business, they would have rolled their eyes and thought, ‘You ought to look into that. Because everyone knows boutique aviation is loaded with dreamers and crackpots and con artists.’ ”

Kestrel CEO Alan Klapmeier didn’t respond to a request for comment. Kestrel merged with Eclipse in 2015 to form One Aviation.

“Due to Kestrel’s inability to show measurable progress towards obtaining financing, WEDC is moving forward with legal action against the company,” WEDC spokesman Mark Maley said in a statement. “At this point, WEDC has not gone to court to recoup the funds, but we will pursue any and all remedies available to us to protect the state’s investment.”

and of course:

Walker’s office didn’t respond to a request for comment.

Look out Racine County…look out Wisconsin taxpayer…despite assurances that the process for approvals has improved since the Kestrel deal…how equipped is WEDC to handle the $3 Billion Foxconn deal?


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2 thoughts on “WEDC threatens legal action against Kestrel Aircraft

  1. WEDC got what it wanted out of Kestrel- a few photo ops and headlines to convince rubes that WEDC actually might be a valid economic development tool.

    It’s not. It’s a slush fund for Walker donors and a PR machine for the Walker campaign. Any job creation is merely coincidental.

    And yes, this is a bad harbinger for the Fox-con, as it’s a similar pre-election stunt to try to sucker low-info voters into thinking “it’s working.”

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