Create a free Industrial Equipment News account to continue

Aircraft Start-Up Took Wisconsin for Millions

Rushing to lure manufacturing jobs resulted in a financial loss that could impact future deals.

About five years ago Wisconsin Governor Scott Walker announced that his state’s Economic Development Corporation, or WEDC, was making $20 million available to Kestrel Aircraft in the form of tax incentives and small business loans.

In exchange, the company promised to create over 600 jobs and invest more than $50 million as it ramped up production in the northern part of the state.

Fast forward to the present and Kestrel Aircraft has collected more than $700,000 in tax credits while defaulting on state loans and creating only 25 jobs. WEDC announced last week that it is taking legal action against the company.

This news breaks just weeks before a November 8 WEDC board meeting to approve a $3 billion deal with Taiwan-based Foxconn for a $10 billion manufacturing facility promising to create upwards of 10,000 jobs in the state.

This misstep coming to light so close to the approval of a deal that many feel will place Wisconsin in dire economic straits if it fails, has led some state senators to seek changes to the contract approval process.

They want greater stakeholder analysis of the actual contract in hopes of preventing Foxconn from becoming another Kestrel.

In retrospect, many feel the Kestrel deal may have been approved prematurely to get out in front of a recall movement against Walker.  The Kestrel deal was also suspect because the company had already struck a similar deal two years prior, which involved building a plant in Maine. Big surprise – the financing didn’t come through so the company turned to Wisconsin.

WEDC moved forward with the deal despite the fact that Kestrel had only built a single prototype of its six-seat turboprop jet, and hadn’t even begun the three-to-five year Federal Aviation Administration certification process for the aircraft.

Kestrel has made payments to the state totaling $865,490, but not a dime since November of last year. It still owes the state more than $3.4 million.

More in Operations