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Altus aircraft maker cites FAA delays in layoffs

Production delays plague airplane company
Oklahoman, June 1, 2007
Paul Monies

Federal inspection delays and supply issues have stalled airplane production and led to layoffs at fledgling Quartz Mountain Aerospace in Altus. The company's decision to lay off 20 of its 104 employees last week comes just months after the first Luscombe Model 11-E rolled off the production line.

"With delays, we just had more people than we had work for right now," said John S. Daniel, president and chief operating officer.

Most of the laid-off workers are production workers, but there also are several draftsmen and clerks, Daniel said. They will be eligible for unemployment benefits and could be recalled to work later this year.

Until Quartz Mountain Aerospace receives its production certificate from the Federal Aviation Administration, the FAA must inspect all parts and planes in production, Daniel said.

"They have not abandoned us, but they've told us how much time and people they can dedicate to our effort," Daniel said. "What that amounts to is that it will take us longer to get production started."

FAA spokeswoman Elizabeth Cory said the agency is trying to do more with fewer resources.

"We are prioritizing these projects on a national basis," Cory said. "The safety of our current fleet is our top priority, but our goal is to get to as many of these new projects as quickly as possible."

Daniel said parts shortages and internal training issues also contributed to the production delay. Despite that, the company still has about 120 "firm" orders for the Luscombe 11-E, he said.

"Those people are aware of the problems," Daniel said. "At this time, we've not lost any potential customers because of the time delay."

Miles Hoover, regional sales representative for Luscombe Southwest Inc. in Grapevine, Texas, said the company has kept him informed of the delays. He's ordered several of the planes.

"They've got most of the planes sold if they can just get them into production," Hoover said.

Daniel said he expects the company to get its FAA production certificate by September. With that, engineers and production managers can vouch for each plane's safety and airworthiness. The company still will be subject to regular FAA safety audits, Daniel said.

"I think we'll be up and running full bore by the end of the year," he said.

In the meantime, the company is continuing to work toward the FAA certificate and may take on contract work for other manufacturers in fabrication and parts, Daniel said.

The Luscombe 11-E is a single-engine plane that seats up to four people.

The company is marketing the planes to flight schools, recreational pilots and government agencies.

Quartz Mountain Aerospace, formerly Luscombe Aircraft Corp., came to Altus in 1996.

The company has benefited from several state and local economic development incentives. Among them are Quality Jobs, $9.5 million in loans and infrastructure from the Altus Municipal Trust Authority and $32 million in financing through Oklahoma's rural venture Capital tax credit programs.

Owl's comments:

1. Quartz Mountain Aerospace should have only received $9.6 million in tax credits. The legislation provided for 30% of the total investment.

[Ref A111]

2. It appears the $32 million mentioned above is the part of the state tax credit Quartz Mountain Aerospace received. The rest of the $66.3 million it cost the state was kept by the promoters and investors.

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