The state of Wisconsin is taking legal action against an airplane manufacturer that received $4 million in state loans and millions more in tax incentives in 2012 to build a plant in Superior that was to employ 665 people.

Five years after the loans were made to Kestrel Aircraft, the manufacturing plant hasn’t been built, there are no aircraft manufacturing jobs in Superior, and Kestrel – now part of ONE Aviation, headed by Northland aviation mogul Alan Klapmeier – hasn’t made a loan payment to the state in 11 months and is in default.

In a memo Monday from the Wisconsin Economic Development Corp. obtained by the News Tribune, state officials told the company they are “moving forward with legal action” because of “Kestrel’s inability to show measurable progress toward obtaining financing.”

“We will pursue any and all remedies available to us to protect the state’s investment,” the memo says.

Meanwhile, one year after being offered $1.5 million in public financial incentives to expand to the Grand Rapids airport, a subsidiary of ONE Aviation still hasn’t accepted the money.

Iron Range Resources and Rehabilitation Board officials confirmed this week that Albuquerque, N.M.-based ACC Manufacturing Inc., which makes composite airplane parts for its parent company, ONE Aviation, hasn’t used the $1.5 million Iron Range loan.


ONE Aviation – formed in 2015 by the merger of Kestrel Aircraft and Eclipse Aerospace – also hasn’t moved any work into a vacant hangar at the airport purchased by the Grand Rapids Economic Development Authority last year with a $293,000 loan from Iron Range to the city. ACC had pledged to build a manufacturing plant in the hangar that by now would employ at least 20 people making composite parts for ONE Aviation’s Eclipse jet.

Iron Range officials and state lawmakers on the Iron Range board even expressed hope that Klapmeier would not just build the parts plant, but also decide to build his long-developing Kestrel business airplane in Grand Rapids.

So far, neither has happened.

“We’re being cautious. But we’re still hopeful,” Iron Range Commissioner Mark Phillips told the News Tribune. “The latest we’ve heard is that they’re still trying to get their financing organized. We aren’t out anything to let them have more time.”

Klapmeier is the former co-founder and head of Duluth-based Cirrus Aviation who left that company in 2009 and struck out on his own to build Kestrel. He has said he still maintains a home near Cloquet and a cabin near Iron River. He did not respond to News Tribune requests for comment on the status of Kestrel.

WEDC officials say the state has fulfilled all of its contractual obligations and tried to work with Kestrel, the company’s bank and local officials in Superior, but to no avail.


According to the WEDC memo, Kestrel repaid $865,490 of the $4 million but hasn’t made a payment since Nov. 15, 2016.

ONE Aviation is based in Albuquerque, N.M., where it produces the Eclipse business jet.

So far, the company’s planned Kestrel turboprop aircraft has not received federal certification for manufacturing, and it remains unclear if or where the business aircraft will be built. In July, Klapmeier told the AIN Online aviation news site that plans for the Kestrel had been shelved.

“Everyone’s working on Canada,” Klapmeier said, referring to ONE Aviation’s new Eclipse Canada model jet aircraft.

Last week, the Portland Press Herald reported that Kestrel Aeroworks has been evicted from its facility in Brunswick, Maine, for not paying rent.

The company, headed by Klapmeier, in 2010 promised to create 600 jobs in Brunswick while developing the all-new turboprop business aircraft. That never happened, and last week Kestrel’s lease at a 64,000-square-foot facility was terminated by the Midcoast Regional Redevelopment Authority, the quasi-governmental agency that operates the former naval air station.


Kestrel reportedly owes about $360,000 in back rent, and the authority was considering court action to seek the past-due amount. The company had about 12 employees in Maine.

ONE Aviation is producing the corporate Eclipse jet in Albuquerque. Klapmeier said last year that the company is focused on bringing the Eclipse to full production and the second-generation “Eclipse Canada” jet to market before it starts producing the planned Kestrel turboprop.

The Eclipse 500 is a small, six-seat business jet in the works since the mid-2000s. Last month Klapmeier announced that faster, larger “Eclipse Canada” version had been successfully tested in flight.

“This is a key milestone in the path to making a very good airplane a great airplane,” Klapmeier said in a September statement.

But sales of the Eclipse have not gone as planned. In January, ONE Aviation announced an undisclosed number of layoffs at the Eclipse plant in Albuquerque, according to AIN Online.

Airline industry analysts “expect quarterly sales to be down for aircraft deliveries, and we’re seeing that throughout this market space,” Ken Ross, ONE Aviation president, told AIN at the time. “We have primarily realigned our production, service and engineering capabilities to be more efficient.”

Klapmeier returned to Minnesota one year ago with the promise of some related jobs. The parts made in Grand Rapids would be used in the Eclipse assembly line in New Mexico. But it’s still not clear if or where the Kestrel will be built.

The Kestrel 350 is planned to be an all-composite, single-engine turboprop aircraft that could carry up to eight people at high speed over long distances and be designed to be “far more versatile” than jet aircraft. It would burn less fuel and be able to maintain approach speeds at large busy urban airports yet land on short, grass or gravel strips in rural areas, according to the company’s website.

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