Analysts downplay Cravaack's objections to Cirrus sale
Analysts are downplaying concerns raised by U.S. Rep. Chip Cravaack over the sale of Duluth-based Cirrus Aircraft to a Chinese company.
Cravaack, who represents Minnesota's 8th Congressional District, has raised concerns about jobs and sensitive technology as a result of the deal announced a month ago.
A government panel called the Committee on Foreign Investment in the United States is reviewing the Cirrus sale for its effects on national security.
Cravaack, a former Navy pilot, has written to the committee to urge extreme caution.
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"I do not want this type of technology being used for military evolution against our troops," Cravaack said.
Cravaack cites carbon-composite materials technology used to make some Cirrus airplane parts, turbofan engines for a new Cirrus jet in the works, and concerns over a small rocket which fires the signature Cirrus all-airplane parachute. Each, Cravaack said, has a potential military application.
"We have to understand that the civilian aviation community of China is basically an arm of the military, and the technology that we would be transferring over there would be easily dovetailed into military type of operations. I am concerned with that," he said.
Cravaack also questions how long Cirrus's 500 jobs will stay in this region, saying the new owner could decide to move them to China.
Cirrus CEO Brent Wouters responded with a letter Monday, explaining that the deal brings investment that saves regional jobs. Wouters, who was unavailable for comment Tuesday, explained that moving production to China would be costly since Cirrus' prime markets are in western nations.
He also disputed that China would gain sensitive technology. China already has access to carbon-composite technology through a joint venture with the Boeing Company. The government determined the small rockets are not munitions and can be exported, and the jet engine in question is widely available to the Chinese in other commercial aircraft.
That rings true to Derek Scissors, who tracks China's overseas investments with the conservative Heritage Foundation. Scissors said he sees little in Cirrus of military value, but the company's technology looks useful for civilian aircraft.
But Scissors said keeping jobs in the U.S. long term could be a concern.
"I don't think they would move the jobs out right away," he said. "I'm saying that when the Chinese come to purchase an asset, they're not thinking about how to extract the most dollars. They're looking for a piece of technology or a resource they can't get elsewhere. Once they have it, then they prefer to have the production in China if that's possible."
But even that's unlikely, according to Richard Aboulafia, an analyst with aircraft and defense consultant the Teal Group. Move production, he said, and you lose Cirrus's most valuable asset — the FAA certificate that allows Cirrus to build and sell planes.
"They would kind of be shooting themselves in the foot if they moved the entire factory to China," Aboulafia said.
Cravaack said he's not dead-set against the sale, but wants to be sure key technology stays in U.S. hands. But the company's sale may face other opposition.
There's an attempt underway to organize an investor group to outbid the Chinese. And some of the company's investors are grumbling about a small return from the sale, and might sue to block it.
And even if the company were bought by a U.S. investor, that's no guarantee the jobs stay in Duluth and Grand Forks, according to University of Minnesota-Duluth economist Jim Skurla.
"They may move out to California, or Wichita, which makes a lot of planes," Skurla said. "So that even, with any kind of investment here, those new equity owners have the right to do the operations where they choose."
Cirrus officials said they hope to have the sale approved and completed by the mid-point of this year.