Another Crash-and-Burn for Eclipse

Six hundred employees, and the potential for “thousands” more indirect jobs. A “model of low-cost production.” In just a few months, the assembly of “four small, ultralight jets a day.”

That’s how Forbes described Albuquerque-based Eclipse Aviation in 2006. In 2017, the reality is quite different.

After the firm went bankrupt in 2008, FLYING‘s J. Mac McClellan surveyed the carnage:

There has never been a financial failure of this scale in the entire history of general aviation. Eclipse investors have lost hundreds of millions, but individuals are also big losers. Anybody who had a deposit for an airplane lost the money. And anybody who took delivery of the 260 or so airplanes to leave the factory has lost all warranties and the promises to modify the airplane to a final and usable status.

A disaster of this size has many causes, but the most fundamental was a fantasy about the economics of designing, building and supporting airplanes. The company also predicted impossibly low empty weights, which then led to unattainable performance and range predictions, and it expected to accomplish all of this in record setting time.

A deposit-losing investor turned what was left of the company into “Eclipse Aerospace,” which was later merged with Kestrel Aircraft to form ONE Aviation. Since the union was announced in 2015, two rounds of layoffs have been announced — the second on Friday, with an undisclosed number of employees losing their jobs. The workforce-reduction action is being spun as necessary to “transition” away from the EA550 aircraft to “the highly anticipated EA700 series.” But given more than a decade of disappointment, skepticism is warranted.

Significantly subsidized by New Mexico’s taxpayers, the woes of Eclipse Aviation/Eclipse Aerospace/ONE Aviation offer another reminder that the Land of Enchantment is not, despite the hype, an “aerospace state.” Errors of Enchantment has run the dismal numbers before. But it’s even worse than what we reported in April — according to federal data, New Mexico annual employment in aerospace product/parts manufacturing declined between 2013 and 2016, from 1,071 to 899 jobs.

Despite the grandiose promises of pols, and a raft of “incentives” (i.e., corporate welfare) designed to boost the industry, aerospace is not thriving in New Mexico. It’s time for a new approach.

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3 Replies to “Another Crash-and-Burn for Eclipse”

  1. Why is Right to Work, in a state with few private unions, the solution? If NM was a RTW State, would Eclipse have succeeded? Would One Aviation be a thriving concern?

    1. To my knowledge, no one associated with the Rio Grande Foundation has claimed that RTW is the “solution” to the state’s dismal economy. But as part of a package of significant reforms, it can play a key role. New Mexico has a fair number of natural advantages, and is surrounded by economic-development dynamos. There’s no reason why, with the right policies and culture, the state cannot thrive.

      What’s needed is a complete abandonment of the fallacy that central planning with grow the economy. Corporate welfare for manufacturing, film/video production, call centers, aerospace/defense, etc. has clearly failed. So has “public investment” in schools and welfare programs.

      RTW is both sound policy and an important signal. Add tax reform/relief, a regulatory overhaul, school choice, and the like, and the state’s fortunes will change. Even skeptics have a solid reason to come on board: Why not try a different approach than the one that’s been failing for the last 80 years or so?

  2. Wherever government (taxpayer) money is being handed out, a nest of “industries” will spring up to get a “piece of the action”. What is easily obtained is rarely invested with care. As usual, the taxpayers are stuck with the burdens, while charlatans reap the benefits.

    A good beginning for economic recovery would be to fire the politicians and bureaucrats who engineered this economic disaster, and to bring the charlatans to justice. The “lost” money did go somewhere. It should be returned to the taxpayers.

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