Winston-Salem lands major aircraft-industry player without offering incentives

Published 12:00 am Thursday, May 2, 2019

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By Sam Hieb
Carolina Journal News Service

WINSTON-SALEM — No big announcement. No contentious public meetings. No press conference. But most important — no economic incentives.

News that MRO Holdings Inc. — a leader in the aircraft maintenance, repair, and overhaul industry — was setting up shop in Winston-Salem’s Smith Reynolds Airport drew little fanfare.

And that’s the way MRO Holdings chief executive officer Greg Colgan wants it.

“We’re not looking for handouts,” Colgan told Carolina Journal. “We’re here to do our part and establish some credibility.”

MRO Holdings announced earlier this month that it had signed a letter of intent to buy North State Aviation — a maintenance, repair, and overhaul company that in recent years had gone through a rough patch.

As the Winston-Salem Journal reported, North State Aviation abruptly went out of business in March 2017, eliminating more than 300 jobs. However, a management group reorganized and got the company up and running again, although the number of jobs was fewer than the original 345.

In the meantime, MRO Holdings was looking for an opportunity to get a foothold in North Carolina. The reorganized North State Aviation was an attractive purchase for three big reasons — infrastructure, workforce and legacy.

The North State Aviation bays were once owned by Piedmont Airlines, which began operations in Winston-Salem in 1940 and emerged as a major carrier until USAir bought it in 1989.

“I love the legacy of the facility. That’s something you don’t underestimate,” Colgan said. “I don’t know how many people have told me their father worked at Piedmont.”

The maintenance, repair and overhaul business, for obvious reasons, is crucial to the airline industry. MROs do everything related to an aircraft from overhauling engines to replacing seats and lavatories.

According to the N.C. Department of Transportation’s Division of Aviation, the MRO industry in North Carolina experienced a 46% job growth between 2012-17, with 148 companies providing 4,400 jobs. Nationwide, North Carolina is fifth in the nation in MRO employment.

Worldwide the MRO industry is expected to grow over the next 10 years, considering the in-service commercial airline fleet is scheduled to grow from nearly 25,000 aircraft at the beginning of 2017 to more than 35,000 by 2027, according to the global consulting firm Oliver Wyman.

And while new planes will certainly come online, in 2017 only 58% of the fleet will be new aircraft.

Generally speaking, North Carolina is putting a lot of stock in the aerospace industry. An informational packet produced by the state’s Economic Development Partnership touts the many advantages the Tar Heel State offers a company looking to come here.

According to the EDP, North Carolina is ranked second in aerospace industry growth, as it is home to more than 200 aerospace companies and more than 400 aerospace suppliers.

The state also has 22,000 graduates per year in Science, Technology, Engineering and Math education. As a result, the industry should have a strong qualified workforce, something that’s desperately needed.

“The capacity constraint is around skilled labor,” Colgan said. “It’s very limited, but it’s also transient. You’re constantly building a culture with a chain of employees.”

Add a budding workforce to an already budding industry — then throw in North Carolina’s other advantages — low tax rate, low cost of living, and an ever-expanding highway system. According to EDP, 178 million customers are within a day’s drive, setting up an industry and an area well-suited for each other.

Smith Reynolds Airport is prime for growth in the aerospace industry. As passenger flights waned after Piedmont merged with USAir, Greensboro’s Piedmont Triad International Airport emerged as the region’s primary passenger airport. PTI, however, has also has seen its commercial takeoffs dwindle with the growth of Raleigh and Charlotte airports.

But Smith Reynolds has worked hard to maintain volume with general aviation and private aircraft. It is the largest of the state’s “general aviation” airports,” providing more than 3,000 jobs and adding more than $800 million into the local economy. Both are expected to grow once a list of proposed projects at the airport are completed.

The list includes a terminal renovation starting construction in winter 2020, with a scheduled completion date of summer 2021 and an aviation center operated by Forsyth Technical Community College.

As it stands, the existing infrastructure is prime for MRO Holdings to expand after it establishes itself at Smith Reynolds.

“The facility’s huge — it’s got big bays, so that will allow them to get more employees here, because it’s kind of underutilized now,” said Mark Davidson, the airport director at Smith Reynolds. “The facility is unique in that in can handle 737s or 757s, so I think that’s what really contributed to their decision to acquire North State. This will allow them to bring in customers that they didn’t have access to before.”