After struggling along financially though the recession of 2008-2011 Cirrus Aircraft was running short of aircraft orders, cash and laying off staff. Things at the Duluth, Minnesota aircraft builder were not looking good. Then in February 2011, Cirrus was sold for US$210M to China Aviation Industry General Aircraft (CAIGA), a subsidiary of Aviation Industry Corporation. CAIGA is wholly owned by the Government of the People's Republic of China.
At the time AVweb's Russ Niles said "Chinese participation in the aviation industry isn't necessarily a bad thing and the folks in Duluth and Grand Forks could have suffered a worse fate. In the absence of a sale, bankruptcy was a real possibility for Cirrus and it might have been hard for a trustee to justify operating the business with the numbers it was showing. As for where it leaves current Cirrus owners and those thinking of buying one, the sale is probably a positive thing." I posted about this event and I agree with Russ, it was either Chinese ownership or the company was probably finished.
Every time North Americans buy Chinese goods, at places like Walmart, the Chinese government makes money and then uses that cash to buy up North American companies. That is just the way whatever we have that passes for free enterprise works these days, at least regarding Chinese state owned companies.
So Cirrus got settled into being owned by probably the richest entity of any kind on the planet, the Government of the People's Republic of China. Suddenly investment was available for mothballed programs like the Cirrus Vision SF50 single engine jet, workers were recalled and production increased. All well and good and as expected.
Then, in early March 2013 it seemed that the company was going, hat in hand, to the city council of Grand Forks, North Dakota, where Cirrus has its secondary plant, asking for a US$950,000 loan to buy a new autoclave. The company already has large outstanding loans from the city and this loan would have just increased the payments.
Even more surprising was the way it turned out, with council initially refusing the loan, concerned about the company's ability to repay it, then relenting, apologizing for the doubt and granting the loan. So now Cirrus can go and order their new autoclave, something they claim will create ten new jobs in Grand Forks.
Personally I don't really get it. Since when is a US city council now a bank, loaning money to companies? Since when do small US municipalities, in one of the most indebted nations on earth, the USA, lend tax money, collected from their residents, to the communist Government of the People's Republic of China, as I noted, probably the richest entity on earth right now? Is this what is meant by capitalism and free enterprise in the 21st century?
I realize that this is all tied to jobs and if Grand Forks wants manufacturing jobs to stay in the city then they have to pay companies to stay there or else some other municipality will lure them away, but the way this loan looks, I think it is really time to rethink that whole flawed premise. Foreign buyouts and investments should not turn out to be a hostage taking.
Americans always tell me how much they hate communism and love their free enterprise system, where anyone can build up a business though sheer determination and hard work. To me a US municipality lending money to the Chinese government to build airplanes to sell to rich Americans doesn't seem to fit any notion of capitalism I know of, no matter how hard I squint.
Feel free to tell me that I am wrong!