Recovery of Dassault Falcon Jet Benefits Arkansas

By Luke Jones, Arkansas Business, 12/9/13

One of Little Rock’s most important international companies sits directly under the flight paths of travelers departing and returning from overseas.

The Dassault Falcon Jet completion center comprises almost 1 million SF of hangar and office space at the edge of Clinton National Airport, where it has been situated since 1975. The facility employs 1,700 workers.

Dassault Falcon Jet is one of about a half-dozen subsidiaries of Dassault Aviation Group of Paris.

Before the economic downturn, the completion center sent most — about 70 percent — of its finished planes to customers in the United States.

But the recession bled those customers dry, resulting in a spate of order cancellations. A $30 million expansion announced in 2006 and 2007, which included a 66,500-SF paint facility, was followed by the company cutting its workforce by more than 300 through 2009.

With domestic deliveries slumping, the company shifted its gaze overseas.

Antoine Ajarrista, general manager of the completions facility, said the company’s customers are now mainly European, Middle Eastern, Brazilian and Chinese.

“There’s still something like 40 percent in the U.S., but most of our deliveries today happen all over the world,” he said.

But unlike competitor Hawker Beechcraft of Wichita, Kan., which declared bankruptcy in 2012 and later closed its Little Rock completions center, Dassault’s Little Rock business seems to be thriving.

In 2012, converted from euros, Dassault Aviation Group’s revenue was $5.34 billion, up 19 percent from 2011; net income was $710 million, up 25 percent.

In May, Dassault Falcon Jet announced a three-year, $60 million expansion plan, in which its Little Rock facilities would grow by 250,000 SF in anticipation of a new model of aircraft.

The new business brought in by the expansion is expected to create scores of new jobs, Ajarrista said. “We could have up to 200 additional employees when these new facilities become operational in 2016, depending on the market situation.” he said.

Little Rock’s Role

So how does Little Rock fit into Dassault’s business model?

It is one of the largest business jet completion centers in the world. The company has three other facilities in the U.S.: two service centers in Wilmington, Del., and Reno, Nev., and an administrative headquarters in Teterboro, N.J.

The company delivers mainly to corporate customers. The center completes four models of business jets: the Falcon 2000S, 2000LXS, 900LX and 7X. They differ chiefly by flight range, varying from 3,350 to 5,950 nautical miles.

“We have a 30 percent market share for large-cabin business jets,” Ajarrista said.

Dassault also completes military jets, including the unmanned nEUROn, the twin-engine Rafale fighter jet and, until 2007, the single-engine Mirage 2000 fighter.

Before the recession, the Little Rock location made sense because it was close to the majority of the company’s customers.

“Most of our customers were here, so we had to be as close as possible to them,” Ajarrista said.

But since its U.S. buyer base has dwindled, it now seems to make less sense for the completion center to be so distant from the company’s headquarters. Ajarrista, however, said a couple of factors are keeping completions in America.

U.S. labor, for one, is cheaper than France’s.

Secondly, the company prefers to use dollars, rather than euros, when it can. “We sell in dollars,” Ajarrista said. “So it’s important to keep a large part of our costs in dollars.”

He said much of the equipment that the company buys from third parties is also in dollars.

In May, Eric Tate, Falcon Jet’s vice president of human resources, also noted that the skill set of the Little Rock workforce is “second to none,” and that it would be a logistical problem if the company had to train a new completions crew at a different location.

The work that happens at Falcon Jet is the last stage in the process of building Dassault’s planes.

“Nearly all the production facilities for Dassault Aviation are in France,” Ajarrista said. “Each facility is specialized. One will do the wings; another will do the big metallic parts like wings and fuselage.”

All the parts are shipped to Dassault’s assembly center at Merignac Airport in Bordeaux, France. Some parts, like the engines and the cockpit, are purchased from third parties.

When finished in France, the plane is ferried to Little Rock for completion.

Upon arrival in Arkansas, the plane has the bare minimum needed for flying: Fuselage, engines, cockpit. The completion job involves installing everything else, from interiors to passenger seats to cosmetic details. It also includes computer systems and wiring. Once work on the plane is done in Little Rock, the plane is ready to be sent to the buyer.

About 70 completed aircraft leave the Little Rock plant each year.

Incentives Play Role

As for the three-year expansion plan, it’s underway. By 2016, the completion center will be finishing a fifth model of business jet, the 5X, which has a range of 5,200 nautical miles.

“The Little Rock Regional Chamber of Commerce is very pleased with the announced plans,” said Chamber CEO Jay Chesshir. “This is a project that we’ve been working on since 2008 and look forward to the additional growth of investment and jobs.”

Several other cities had been pushing for Dassault to relocate the 5X completion center, leading the city of Little Rock, the airport and the Arkansas Economic Development Commission to offer Dassault a handful of incentives to keep its new operations in town.

This included everything from giving Dassault a break on rent to building new roads and infrastructure near the facility.

Grant Tennille, executive director of the AEDC, said the acquisition of land for the project took some time, but “our sense is that the design and engineering are moving forward, and that Dassault is on track,” he said. “We remain excited about Dassault’s commitment to Arkansas and to Little Rock.”

When finished, the facility’s completion capacity can increase to 90 planes per year, Ajarrista said.

He said the first part of the expansion, building a new small hangar, was completed subsequent to the May announcement. A new five-axis machining center is currently being tested to be installed in that hangar. Ajarrista said the machinery is useful for working with curved surfaces.

Next in line is expanding the company’s capacity to work on headliners — aircraft ceilings. “We needed to expand that area, which was become cluttered,” Ajarrista said. “That part is being modified and expanded and should be done by May 2014.”

Dassault is working with Polk Stanley Wilcox of Little Rock in designing a new seat shop, which is slated to break ground in March. The shop will be finished by the third quarter of 2015.

But the completion of the expansion depends on when the 5X is ready for production. Currently, it’s undergoing testing in France. “We will really see things happening in 2014,” Ajarrista said.