Harsh Rhetoric In Presidential Campaign May Have Contributed To The Outcome

U.S. government trade policy and harsh campaign rhetoric on the part of the candidates for President may have contributed to the collapse of a deal to sell Hawker Beechcraft to a Chinese concern, analysts say.

In announcing that Hawker would remain a U.S. company renamed "Beechcraft Corporation" after emerging from bankruptcy, CEO Steve Miller, a recently-hired turnaround specialist, said that the company had tried hard to reach a deal with Superior Aviation Beijing Co., Ltd, but the transaction "could not be completed on terms acceptable to the company."

Forbes reports that one of the issues may have been the government's insistence that the military division of HBC not be sold to the Chinese concern. Also complicating the sale was the fact that the company's labor unions would not allow their negotiated pension plans and other labor agreements to be re-opened during the exclusive talks with the Chinese company. IAM president Tom Buffenbarger said publicly that the union would work to keep the company as a U.S. firm.

Uncertainty over labor issues and the eventual product line ... in the statement Miller said that the company would focus on piston and turboprop airplanes, implying that the jet business could be abandoned ... caused the value of HBC's term loan debt to lose more than a fifth of its value.

But analysts also see the harsh rhetoric about trade with China coming from both sides of the Presidential contest as having a chilling effect on business between that county and the U.S., while stopping short of saying that it was a factor in the collapse of the negotiations between HBC and Superior.

FMI: Miller Statement