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Mon, Mar 28, 2011

Congressman Cravaack Urges Caution In Cirrus Deal With China

Sends Letter Treasury Secretary Geithner On Cirrus Purchase

U.S. Congressman Chip Cravaack (R-MN-8) has sent a letter to Treasury Department Secretary Timothy Geithner regarding the proposed purchase of Cirrus Industries Incorporated by the China Aviation Industry General Aircraft Company.


Congressman Cravaack

“In the letter I sent today (Friday), I urged Treasury Secretary Timothy Geithner – who serves as the head of the Committee on Foreign Investment in the United States – to use extreme caution when dealing with the China Aviation Industry General Aircraft Company’s bid to purchase Cirrus Industries Incorporated,” wrote Cravaack, who is Vice Chair of the House Transportation and Infrastructure Aviation Subcommittee. “My main goal is to ensure the high-skilled jobs at Cirrus stay in Minnesota, instead of being shipped overseas to one of our main competitors in the global market. On top of that, I have serious concerns with the transfer of advanced aircraft technology from Cirrus to a company that is essentially owned and operated by a Chinese government-run defense contractor.”

The Committee on Foreign Investment in the United States (CFIUS) is an inter-agency committee authorized to review transactions that could result in the control of a U.S. business by a foreign entity, in order to determine the effect of such transactions on national security. If CFIUS finds that a transaction would present a risk to national security, the Committee may enter into an agreement with, or impose conditions on, the parties involved to mitigate such risk. It may also refer the case to the President of the United States for action.


Cirrus CEO Brent Wouters

Cirrus CEO Brent Wouters said Cravaack is "completely wrong on the facts," according to a report in the Duluth News Tribune. Company spokesman Todd Simmons said that all the technology in use by Cirrus is already known by the Chinese, and that the country's motivation for buying the company is to beef up their aviation infrastructure.

But Craavaack says there are problems with the possible acquisistion by the Chinese of composite carbon fabrication, The FJ33 engine, FADEC systems and the full-airframe parachute system. He notes that AVIC, which controls CAIGA, is involved in both commercial and military aviation sectors, and is designing the J-20 stealth fighter for China.

Wouters has also said that the sale of the company will not mean the airplane will be built in China, costing American jobs. He has said previously that moving production to China would add an additional $35,000 to each airplane sold, and that it would not be cost-effective. He said blocking the sale could mean the end of the company, and losing those jobs permanently. A group of American companies have reportedly been planning a counter-offer, though Wouters said he has not been contacted.


Brian Foley

GA consultant Brian Foley, who is assembling that competing offer, tells ANN that he has received strong interest from multiple parties who would like to have an opportunity to purchase the company.

FMI: http://cravaack.house.gov, www.cirrusaircraft.com

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