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Bend Planemaker's Future Up For Grabs

Bend has become the set in a multimillion dollar soap opera starring the aerospace industry. One of the city's biggest employers, Columbia Aircraft, has filed for bankruptcy and is looking for a buyer.

The sale could happen by next month. As Central Oregon correspondent Ethan Lindsey reports,  one famous jetmaker is in the lead, but the deal is experiencing plenty of turbulence.

Columbia Aircraft filed for bankruptcy in September and is set to be auctioned off next month.

In the past few years, the company has laid off hundreds of workers and lost millions of dollars.

So a sale could be a good way to stabilize the business.

Still, many worry that a new owner could move the company and cut 400 local jobs.

That could deal a devastating blow to the Bend economy.

But wait a second — isn't central Oregon's business based on tourism and timber?

Since when did a small planemaker become so important?

Well, since the late 1990s. That's when Bend began to welcome a booming aviation industry.

In fact, last year, there were twelve major plane parts manufacturers here.

That's about 1000 workers and $31 million in annual payroll.

In percentage terms — it's 10 percent of the area's manufacturing jobs.

Doug Meyers: “Back then, this industry wasn't here.”

Doug Meyers is Columbia Aircraft's marketing manager. He says 10 years ago, local government gave a tax break to planemaker Lance Neibauer.

Which brought his company Lancair to the region.

Doug Meyers: “What happened was that Lance was looking for a place to locate his company, and they brought key people, they trained, so this has become a local industry.”

Workers, like those at Columbia's factory, are now uniquely skilled at operating machinery specific to building small, light aircraft.

Columbia spun off from Lancair, and has now grown to be the leader in the area.

Things stayed rosy until two years ago, when Columbia basically fell apart.

Bad business combined with  bad luck sent the planemaker deep into the red.

Now that the company's filed for bankruptcy, a group of outside consultants is in charge.

Their job is simply to make the company attractive enough to sell.

Michael Culver is one of those consultants - he's the acting chief financial officer.

He says back in 2005, Columbia had a problem installing navigation software into its planes and so it delayed sales for several months.

Michael Culver: “They were building airplanes, so cash was going out to buy materials and pay for labor to build airplanes. They were inventorying the airplanes and they couldn't deliver them. So that was a traumatic experience for the balance sheet, shall we say.”

Finally, in 2006, the navigation system was ready to go. The company had close to a hundred planes waiting outside the factory, to be sold.

Michael Culver: “Just as they were starting to deliver those aircraft they had this hailstorm, which damaged 67 airplanes that were outside at the time. Those airplanes had to be repaired before they could be delivered. So there was a double whammy.”

And for a while, Culver says, investors stuck with Columbia because of the quality of the planes, despite bad management. 

But this year, they just grew tired of waiting for the turnaround.

Wichita, Kansas-based Cessna Aircraft announced in September it would buy the Columbia. The deal could be worth more than $60 million.

Bob Stangarone is a spokesman for Cessna Aircraft.

Bob Stangarone: “It's our intent to keep Columbia in Bend. We bring a certain amount of strength and growth potential to Columbia. Now in the meantime, there will be other bids and the bankruptcy court has full control of this, so we'll just have to see what happens in the process.”

Even though Cessna and Columbia have agreed to a deal, bankruptcy law requires that Columbia consider all offers, and then take the best one.

And, at last count there are three other bidders besides Cessna.

Including one rival planemaker who could choose to simply shut Columbia down, in order to gain market share.

James Campbell is the editor in chief of the industry newsletter Aero-News.

Jim Campbell: “Let's face it, if you're in Bend right now and looking at the prospect of losing so many hundreds of jobs, that's not a good thing. I think its eventually going to be okay.”

Campbell also says rival bidders have filed a formal complaint, alleging that Cessna has gotten a sweetheart deal.

Jim Campbell: “There are four entities that are either bidding or in the process of looking at a bid. Which one? Who knows. Because there is now competition, I wouldn't put my bets on any one of them until the bankruptcy process works its way through a few things yet.”

Consultant Michael Culver, speaking for Columbia Aircraft, says the complaints about the auction process are unfounded.

He says its just legal jockeying by others hoping to buy Columbia, a company with lots of growth potential.

Plus, the industry itself is experiencing major growth.

Stangarone, with Cessna, says foreign buyers could keep that growth going over the next ten years.

Bob Stangarone: “If you looked at our market 6 or 7 years ago, you'd find that 3-quarters of our airplanes were delivered within the U.S. That's changed considerably. Right now, about half of the planes are outside the U.S. and half inside the U.S.”

Other Bend aviation employees contacted for this story didn't want to go on record.

But many say privately that in order for Bend to capitalize on that growth, Columbia needs to stick around.

That's why some locals are more excited about the purchase offers, like Cessna's, that promise to keep the jobs here.

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