T his past Feb. 1, some aerospace heavy hitters came to Wichita, and they were on the prowl. Boeing, General Atomics, Lockheed Martin, even upstart Nextant Aerospace — all were shopping for experienced workers at an informal job fair held at the local Marriott. They know that many of the assembly lines in this town are quiet and that the people who work on them may be sitting at home, waiting for an upturn, which is way overdue.

On that Tuesday, Boeing was looking for thousands of people to add to staffs at its plants in Seattle and Charleston, S.C., as it ramps up production of its commercial airliners. To the extent that Boeing should succeed, there will be that many fewer people to work assembly lines when Wichita plants begin to rehire. But you’ve got to hand it to the visitors; they know where to shop for talent.

The troll for talent intensified in February when the U.S. Air Force selected Boeing’s KC-46A, a 767-variant, as its next aerial tanker. Much of the work on the nearly 200 new aircraft will be done in Wichita, employing 7,500 Kansans and pumping nearly $400 million into the local economy annually. It was a big win for Wichita’s planemakers.

Like Montreal (“Air Montreal,” February 2011, page 42), Wichita is a recognized industrial cluster that manufactures the majority of the world’s business aircraft, and its workforce is highly skilled and sought after.

For the workers laid off at Cessna, Hawker Beechcraft, Bombardier Learjet and the many dozens of their suppliers that dot the Wichita area, this recessionary downturn has demanded more patience than any of them could have expected. According to Steven Horwitz, a professor of economics at St. Lawrence University in Canton, N.Y., this most recent recession is notable because the duration of unemployment has been longer than in most other downturns.

And although many Wichita workers are undoubtedly tired of Judge Judy reruns and itching to get back to work, the housing market complicates the picture for them even if they were ready to move to the shores of the Puget Sound tomorrow. As Horwitz also notes in an essay posted for economists, “Housing policy that subsidized low- or no-equity loans have [sic] left a fair number of people in situations where they would like to move to greener pastures in search of employment, but are unable to make the move because they are stuck with houses they can’t sell, which in turn prevents them from affording a new home or even a rental in the new location.” Mobility is not what it used to be, in other words.

Leaving Wichita may be difficult for many, but ultimately may also be unwise. Manufacture of general aviation aircraft has historically lagged the business cycle, and the industry in Wichita will be slower to come back than other sectors of the economy this time around. Projections indicate that employment will not turn up significantly this year and, frankly, some jobs appear to be gone for good. Upper and middle management, along with graduate engineers, are likely to be somewhat more mobile than those on the production line, but leaving town may neither be easy nor right for them, either.

Even though business indicators may offer scant encouragement, there are solid reasons for both the business and general aviation industry and its workforce to stick around. Whereas Wichita has sometimes been the punch line for jokes about where the glitterati yearn to live, the wisecracks have faded with time and success. While proud of its Old West history, Wichita is totally contemporary and wired, which together with its deep aviation culture attracts and holds the kinds of people the industry needs.

The Wichita economy is fueled by many sources, including healthcare, agriculture, chemicals, energy and, yes, Coleman lanterns. But its primary engine is building, modifying and servicing airplanes, ranging from Boeing jetliners — every 737 is manufactured there — to Beechcraft’s enduring Bonanzas. It is an industry that manufactures the lion’s share of the world’s business and general aviation aircraft, along with the workforce that makes that happen

The industry is made up of the OEMs and their suppliers, but the economy includes all those outside the center of production who provide goods and services to those inner concentric circles. The early aircraft industry took root here because it was close to the center of gravity of oil wealth and agricultural bounty in the first half of the 20th century United States. And it had steady winds and a flat landscape for miles and miles.

Clyde Cessna and Walter Beech were among what were dozens of pioneering aviation entrepreneurs whose Wichita factories drew a workforce like a magnet, training generations of farm boys to use a sheet-metal press and a rivet gun. In the superheated general aviation boom years in the second half of that century, labor supplies grew tight and Wichita’s aviation industry had a reputation for intramural poaching as workers learned the trade at a vendor, gained experience at Cessna, then got recruited by Beech or Learjet, and finally, got lucky if they landed at Boeing’s commercial division (now Spirit Aerospace). But one of the results of the 2009 recession is that Wichita was reminded it is a global competitor, and the prospect of losing manufacturing to low-cost producers became real.

In December 2010, Hawker Beechcraft announced an agreement to modify a plan it had bruited about town that would have relocated the company to Louisiana and sent a lot of work to Mexico. The formal announcement of the deal was rife with symbols of the city’s eternal quest for economic stability. Present at the event were then Kansas Gov. Mark Parkinson; Carl Brewer, the mayor of Wichita; and Karl Peterjohn, one of five Sedgwick County commissioners.

The venue for the announcement was the new National Center for Aviation Training (NCAT, pronounced “en-cat”), a glistening glass-and-metal facility of over 200,000 sq. ft. built with $50 million in county funds, and housing classrooms, labs and equipment in sufficient quantity and variety to build complete airplanes. It also houses the region’s hopes and aspirations, linked inextricably to the dominant academic institutions that feed aircraft manufacturing: Wichita State University; the Wichita Area Technical College (WATC), which will occupy and manage it; and the National Institute for Aviation Research (NIAR, or locally, “nye-are”), which is Wichita State’s hybrid of think tank and skunk works. When NCAT opened its doors last fall, it offered 1,500 students a variety of certificates and diplomas in every conceivable area of aerospace work, including robotics. The county created the Sedgwick County Technical Education & Training Authority to oversee the venture.

Those gathered at the NCAT last December learned that Hawker Beechcraft would get incentives worth $40 million and agree to maintain 4,000 jobs in the Wichita area over a 10-year period. The money, in part, comes from the state’s Investment in Major Projects and Comprehensive Training (IMPACT) program under the Kansas Department of Commerce and includes $10 million over a three-year period from the State of Kansas Investments in Lifelong Learning (SKILL). HBC also gets $10 million in year one and $5 million a year for the next four years in IMPACT funds, which are paid for by bonds financed, in turn, by employer withholding taxes in the state. The city and county each agreed to kick in $2.5 million over five years. All the players — and certainly most of the acronyms — in the Wichita industrial cluster came together that day from government, educators and industry.

Still, in late February, Hawker Beechcraft held a grand opening of its second plant in Chihuahua, Mexico, with yet a third one to follow later this year. The company’s plans for the Mexico workforce could grow to 1,000 workers, even though the scope of work is somewhat limited to sheet metal, wire harness build-up and parts fabrication, much of which was transferred directly from its Wichita plants. The Mexican government was successful in luring the company with incentives that, when combined, constituted an offer Hawker Beechcraft couldn’t refuse.

Mexico was a factor in another Wichita announcement made last summer when Kansas agreed to $27 million in bond financing for improvements to Bombardier Learjet’s Wichita facilities so it could assemble, paint and complete interiors on the new Learjet 85. The all-composite aircraft, the largest Learjet ever, is actually being manufactured at Bombardier’s new plant in Queretaro, Mexico.

One critic of these moves, Wichita State professor Edward Flentje, wrote in an early February editorial in a Hutchison, Kan., daily that Kansas’s form of economic development was investing tax dollars not to bring in new jobs but rather to keep existing jobs from leaving. Flentje, who says he served briefly as an interim Wichita city manager, stated that “the result diverts millions in limited taxpayer funds . . . simply to have an existing business stay put” and pointed to an instance that occurred in 2000 as the first time the IMPACT program applied tax money to job retention, though with stiffer requirements, and predicted “demands will escalate.”

Now that river’s been crossed, and Wichita’s manufacturing community could try to tap the taxpayer for more support in the future. But to hear management tell it, this is a region and workforce that are very special; and who needs incentives anyway? Presumably most Wichitans believe the incentives to persuade Hawker Beechcraft to stay are justifiable at a time when the company was nearly at the vanishing point — and at that point for longer than it had ever experienced before.

But to suggestions that Wichita is going the way of Detroit, aviation executives point out that their aircraft workers would never agree to draw pay for sitting in an empty room, painting an unflattering comparison to some of the Motor City’s past labor practices. There’s a pride here, they say, and the Wichita worker is a very different individual from his brother or sister in Detroit.

David Coleal, vice president and general manager of Bombardier Learjet, believes the region’s virtues are what cinched the decision for final assembly of the new composite Learjet 85 in Wichita. “Here, we compete globally with each other and with other OEMs overseas. The Big Three [in Detroit] didn’t see it that way,” Coleal says. “We compete for a finite number of customers, individuals and corporations. It’s not like cars, where it’s several million units. Here it’s in the thousands, not more.” As a relative newcomer to the area, he brings a fresh perspective to the scene — and likes what he sees:

“Both the city and the state are very pro-business and pro-aviation,” he says. They understand the value of the industry from the tax revenue due on payrolls to the kinds of customers who come here. “There are few places in the world that have that,” he says. “This is like a real gem. Lots of other places would like to have a cluster like this, and it’s ours to lose.”

“Everybody is so passionate in this sector, but the business cycle can drive them away when they get laid off. Retirement people come to my office, many of them in the industry for 30 or 40 years, and they’ve been through a layoff two or three times,” he says. “How can they convey the idea to an outsider to enter our segment? We need to learn how to protect our workforce in the downturns. Can they go for retraining at NCAT? The market will pick back up and the aerospace culture will survive, and we’ll get smarter about how to manage the business cycles.”

Shawn Vick is the executive vice president of Hawker Beechcraft, and he arrived in Wichita in 2009 — just in time for the downturn. “It’s having a significant impact on all manufacturers in the United States, not just aviation,” Vick says. “There is no region that enjoys a different set of realities. In Wichita, this community, as a result of having a fair amount of focus on business aviation, has probably felt more than its fair share, more than any other city with an aviation focus.”

He says the workforce here is highly skilled and aware that they are part of an industry of innovation. “What they do is special and unique, and they take pride in their role.” He adds that the engineering ranks are more likely to stay put. “The nomadic engineer is something you see more in the commercial aircraft space,” he notes. “Our technical community does not have that mentality. There’s an affinity for the company and its products, and also clean-sheet-of-paper opportunities as well as derivative aircraft, and they want to be a part of that.”

Jim Walters is Cessna’s vice president for human resources, and he knows both the Wichita workforce and the training infrastructure that supports it. “The partnership with Wichita State and NIAR really helps us with research and development work,” he says. “There’s been an increase in the overall skill level here, and the area has demonstrated an ability to attract talent for more than 80 years — plus bring in companies.”

Walters says Wichita’s professionals, such as engineers with four years of education and a college degree, come primarily from the Midwest, with Wichita State providing a big contribution. Assemblers and direct labor are mostly drawn from local communities within driving distance and have at minimum a high school education along with considerable NCAT courses such as the six-week sheet-metal training that leads to certification (it’s a bit longer for other paths such as avionics).

“We’re privileged to have the number three school in terms of the number of A&P grads we turn out,” he notes.

Although Walters does not have data to tell him what loss rates are during layoffs, he knows the numbers go up the longer the downturn lasts. Union data he’s had access to suggest that about 15-20% of the workforce is actively looking for employment in Dallas, Georgia and other centers. He says there’s little poaching going on anymore because the playing field has leveled. “We’re all closer on wages and benefits, so there’s less bouncing around,” he says. He believes the nature of the industry attracts certain individuals who revel in “exposure to the complete product,” meaning being close to the completion of aircraft instead of at a station on a line in Detroit installing gas tanks.

“If I turn back the clock 10 years, there was a huge concern about the workforce,” he says, but no longer. “We’ve overcome that with NCAT. For the next five years, the focus is on what we can do to stay competitive. Wichita is not immune.”

He notes that Spirit Aerospace, woven from a bolt of Boeing cloth when the Seattle giant sold its Wichita commercial aircraft subsidiary, started out by negotiating a new labor agreement and becoming more productive. “We at Cessna did a collective agreement covering pay based on performance, looser work rules and flexibility on the shop floor, so there’s been a recognition with the unions that it’s a matter of being competitive globally.” In Wichita, “globally” can be taken to mean “Mexico.”

“Let me put a plug in for the community,” he adds. “Wichita is often described — [he pauses a beat or two] — in many ways, but the area deserves credit. The community has helped us attract talent.”

Deborah Gann, vice president of communications and public affairs for Spirit Aerospace, would second that emotion, and she regards the regional industry as a close family. “Wichita is a small town, and we talk to each other a lot because we have a lot of the same shared interests and issues. If you look at greater Wichita, it’s about 350,000 people, and 30,000 of them work for one of the Big Five [Those are Cessna, Learjet, Hawker Beech, Spirit and Boeing’s Integrated Defense Systems, but a few years back Airbus opened an engineering operation in Wichita as well]. If you count all the people touched by it, it’s about 100,000, and we like to say that 40% of the population is directly or indirectly related to the aircraft industry. If you don’t work in it, you know somebody who does.”

The local industry has formed no formal body or association because there are ample opportunities to brainstorm at city and educational board meetings where area C-level executives and middle managers mingle freely. The closest thing to a membership organization is the two-year-old Wichita Aero Club, and Gann is on its board of directors.

“I have been pleasantly surprised at how well and how quickly the Aero Club was embraced by the Big Five and smaller businesses,” she says. David Franson is an industry veteran who operates a media and communications operation in town and also serves as executive director of the club. He says that various attempts over many years to create some sort of organization that would bring companies together got little support. “When they went to Washington, they could be collaborative, but back in Wichita, the competitive juices would kick in,” he says. When Cessna chairman and president Jack Pelton spoke at Atlanta’s Aero Club a few years ago, he wondered why Wichita, which calls itself the “air capital of the world,” lacked something similar. Robert Stangarone, Cessna’s vice president for corporate communications, called Franson and from a list of 12 companies invited to an organizational meeting in the summer of 2008, 11 showed up. Today Franson counts over 40 corporate members and around 200 individual members.

The community has made a tradition of taking action on behalf of its industry. In the 1990s, the Chamber of Commerce created “Flying in Formation” to organize job fairs and share applications. During that same period, the Kansas Technical Training Initiative launched, benchmarking programs in Georgia and a Johnson County Community College program run by the Burlington Northern Railroad. KTTI involved state, county and city governments plus the universities, community colleges and the aircraft companies themselves to meet a shortfall of trained mechanics, and Franson says it became the precursor to the current NCAT.

If any one man has the god’s eye view of Wichita, it’s Jeremy Hill, newly appointed director of Wichita State University’s Center for Economic Development and Business Research. His job is to collect and analyze data within Kansas along with U.S. federal data that his office repackages. Center researchers perform studies, do surveys and create fiscal impact models for business and industry. He, too, rubs elbows at the Aero Club as well as at meetings of an Outlook Team, “where people from different segments discuss how it’s going.”

At the Team’s quarterly meetings, 30 to 40 business leaders meet, and at least one of those meetings results in a regional forecast. Wichita’s outlook, adjusted Jan. 1, calls for 0.5% growth in 2011 and a gain of about a thousand jobs, some in manufacturing, with non-durables (items consumed daily) prevailing and durables declining slightly as some aircraft companies continue to lay off.

But Wichita will endure, Hill says, because it fits the economics model of efficient regional manufacturing centers, or clusters. “In such a model, all companies in a given industry migrate over time toward a central site where there’s a lot of information sharing that’s mutually beneficial. Airbus came here for the benefits they get, and they share the same suppliers. There’s a magnet here of companies, and although they could go elsewhere, Wichita is where their efficiencies come from. There’s been a recent push to Mexico, which is courting companies, and China is doing the same, but the reality is that there is only so much they can take away. There are components that have to stay here. Louisiana offered much more to Hawker Beechcraft than Kansas did, but still they’re staying here.”

In looking at the value of an industry, he says, it’s the export value, not employment, that counts. “People assume agriculture is the number one industry for this state, but in fact the export of aircraft leads, meat bovine [agriculture, in cattle] is a third of that and wheat is again a third of cattle.” He notes that employment has dropped and those who are employed are working more hours. “So the next cycle won’t see a huge increase in employment. We know capital equipment investment has gone up. Some jobs are not coming back, but average hours worked and wages have both gone up, and people are working more and being more productive.”

Hill has looked at unemployment figures from the state, which provides detailed data by zip code and skills. “We have a lot of unemployment in Wichita, so there’s an excess labor supply right now. There’s also a net out-migration, but it’s mostly senior management. Production workers are unlikely to leave because they are connected to the area. Many will be retrained with NIAR and NCAT here, learning things like composites and [friction] stir welding.” Hill points out that Wichita has strong “multipliers,” which are numbers specific to every industry. “For the larger OEMs, you have [a multiplier of] 4.4185, so for every 100 jobs, you get 442 jobs in the economy. A job in this industrial sector [aerospace] has the largest multiplier in the Wichita area, and perhaps the largest in the state.”

Could Wichita ever lose its aircraft industry? “No,” he says. ‘Things will change, especially on the composites side, some work will shift to the supplier side, and those companies will be more agile and flexible. They’ll support the OEMs. Future growth will come through the supplier side, of which Spirit is a wonderful example. You’ll see growth in the medium and smaller companies such as Kaman Aerospace [composites division in Wichita]. They’re very efficient at supplying the OEMs, and they’re growing.”

For the longer term, Hill says the area might see a big shift, but positioned in a good way due to the changing value of the U.S. dollar. “The dollar is now overly valued due to currency failures elsewhere that cause people to put more confidence in the dollar. But it will push down,” he says. “In the long term, the dollar will shift the value and cost structure of export. Our prices will be cheaper and cheaper on the world market, and value will come back to the United States and to Wichita.”

Just to prove he’s not making this stuff up, Hill notes that economist Paul Krugman, the New York Times columnist, won the Nobel Prize in Economics for research in “economic geography,” which models urban economies and takes note of scale and efficiency that derives from market specialization. So, with that in mind, Wichita will keep building our airplanes for a very long time. BCA