Landing Dassault Falcon: How Local Officials Collaborated on a $60M Expansion Deal

by Luke Jones  on Monday, Jul. 1, 2013 12:00 am  

Dassault Falcon Jet’s $60 million, 250,000-SF expansion announced in May was the result of years of state and federal officials toiling to make the Clinton National Airport the best location for the jet finishing facility.

“This is a culmination — at least for me — of seven years of work to try to get Dassault Falcon to expand here and stay here,” said Ron Mathieu, executive director of the Clinton National Airport. “I don’t think people really understand the level of work and commitment that goes on behind the scenes to ensure we can keep our flagship tenants here on the airport.”

In 2009, city officials including Mathieu traveled to France with Gov. Mike Beebe and met with Dassault’s top brass.

“We were recognizing that Dassault was looking, at that time, to create the project that was recently announced,” said Jay Chesshir, president and CEO of the Little Rock Regional Chamber of Commerce.

Chesshir and others emphasized the city’s willingness to work with the company toward making the expansion a reality, Chesshir said. If Little Rock had lost the expansion, Dassault would have kept its facility in Little Rock, but the larger finishing facility would be built elsewhere and around 400 of the current 1,800 jobs would have been transferred there from Little Rock.

“We knew we were in a stiff, competitive battle for the project,” Chesshir said. “We also knew that if we lost the project it would mean a significant loss of jobs, much less the capacity and ability to continue to expand the Dassault facility in the future.”

What Chesshir, Mathieu and others didn’t know was just how stiff the competition was: For more than five years, at least five other cities had also been aggressively pursuing the Dassault expansion. The identities of those cities have remained hush-hush, except for one, Greensboro, N.C., which announced recently that it had been in the running.

“And as we were trying to create as competitive a position as possible here, we began to look at the issues Dassault was having,” Chesshir said. “One of the major problems was available land for expansion, and two, ingress and egress, not only for their employees but also for goods, services, raw materials and that sort of thing.”

Measures Taken

The city started to focus on those issues.

Little Rock applied for a $1.9 million federal Economic Development Administration grant to expand the road leading to Dassault’s front gate, Chesshir said. In the end about $4.6 million worth of work was performed, with $1.8 million paid for by the Arkansas Economic Development Commission and the rest by the city. The Ninth Street corridor leading to the Dassault gate was expanded. Also, a runway was extended and Sixth Street was diverted to loop around it. The city is also paying to build a traffic circle near Dassault’s front gate.

“Other than being supportive to requests from Dassault, we wanted a more gateway appearance that would, in a way, be supportive of our honor in having them here,” said Jim Dailey, a former mayor of Little Rock who sits on the Municipal Airport Commission.

Mathieu knew that Dassault would need more space, so he and the city started slowly acquiring land north of Dassault for its future use.

“A lot of the areas near there had become vacant over the years, so the commission acquired all that property for future expansion,” Mathieu said. “Here’s the way it works: If someone is looking for a decision on where to go, you really can’t come to the table and say, ‘If you pick me, two years from now when we’re finished buying land, it will be available.’ You have to have some skin in the game.”

“We approached the airport management and commission, along with the mayor and the city manager’s office, about the possibility of acquiring property that would provide land for the expansion,” Chesshir said.

The task of acquiring the land was risky.

“We had to make sure we’re sensitive to the neighbors who live every day with jets taking off,” Dailey said, noting that residents near the airport were not always thrilled when they learned that the airport was going to grow its boundaries.

The risks come from paying for land that may not be used for a long time, or ever.

“The interesting thing about when you buy land is you are preserving your ability and flexibility for the future, but it’s not generating any revenue for you,” Mathieu said. “In fact there are costs associated. You have to maintain it. People are buying jets for $30 or $40 or $60 million, and they’re coming through here, so you have to make sure the land is properly maintained.”

When it came down to the wire, the airport also cut Dassault a deal on rent.

“They own the buildings now,” Dailey said. “They’re capitalizing. We own the land, and we’re giving them a discounted rate.”

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So Dassault pays rent for the land, but not the buildings. The buildings gradually revert to the airport’s ownership over 25 years, saving Dassault about $41 million in rent. At the moment, Dassault is paying the airport $900,000 annually, and that will rise to $1.1 million after the expansion.

“On the front end it’s loaded to their benefit,” Dailey said.

AEDC also offered several incentives to the company. Dassault will receive a 3.9 percent cash rebate on retained jobs and any new payroll for 10 years, tax refunds on building the new infrastructure and $2 million from the Governor’s Quick Action Closing Fund toward building costs.

Eric Tate, Dassault’s vice president of human resources in Little Rock, said the expertise of the Little Rock workforce also helped in the company’s decision.

“In short, everything that is required for the successful launch of our new aircraft exists here, today, in Little Rock,” he said.

“Our employees have made tremendous strides as far as product efficiency by embracing the industrialization of our processes,”

The workers are “second to none,” he added, and the efforts made by the city and state sealed the deal.

Mathieu said the airport’s November 2012 loss of the Hawker Beechcraft completion center and 1,000 jobs after that company’s bankruptcy meant he was doubly driven to keep Dassault and maintain the airport’s purpose as a hub of economic development.

“This is not just a bus terminal where the buses have wings,” he said. “That’s not what this is: It’s an economic generator for the community. You’ll see us working closely with the state, AEDC, the chamber, doing whatever we can do to attract businesses here and keep those jobs.

“When we can do that, we make a positive impact on the community, and those folks come back dressed as passengers.”

Dassault Falcon Jet

Dassault Aviation of Paris has had a presence at Little Rock’s Clinton National Airport since the mid-1970s when Falcon Jet Corp., a joint venture between Dassault Aviation and Pan Am, purchased Little Rock Airmotive, which at the time was a 61,500-SF hangar. Before the purchase, it was used by FedEx founder Fred Smith as a completion center for his fleet of aircraft.

The Falcon Jet completion center is responsible for completion of all Dassault jets worldwide. Dassault’s “green” aircraft — essentially just fuselages and engines — arrive from its facility in Merignac, France, and are fleshed out with interiors, avionics and paint before being delivered to the buyer. The completion center averages 55 to 60 deliveries each year.

“As we are the end of a long assembly/completion process, and where the customer actually takes delivery of the airplane, we are essential to Dassault Falcon’s success in the marketplace, both in productivity and customer service,” said Tate.

The completion center finished a $20 million expansion in 2008. It currently occupies about 897,000 SF at the airport and will have more than 1 million when the new expansion is complete.

The site employs about 1,800.



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