Pacific Aerospace deal 'mind-boggling'
Pacific Aerospace, the Hamilton aircraft manufacturer which traces its roots back to the early days of top dressing, has struck a $75 million deal in China with one of the world's largest car companies.
Prime Minister John Key is signing a co-operation agreement this afternoon between Pacific and Beijing Automotive, which will see the Kiwi company manufacturing its flagship P-750 for the Chinese market.
Pacific chief executive Damian Camp said the deal was the culmination of more than two years' work, but the scale of the deal was still "mind boggling" in terms of scale.
"This is huge. We've been around for 65 years [and] this will be the biggest thing we've done," Camp said.
"This is the largest growth market for general aviation in the world."
The joint venture company would have initial capital of 400 million renminbi, or about $75m. Pacific owns 49 per cent, contributing "cash and intellectual property", Camp said.
Until recently Chinese citizens were not allowed to own private aircraft, meaning there are only around 2000 general aviation planes in the country, compared to about 8000 in New Zealand and 250,000 in the United States.
The P-750, which can carry up to 10 passengers, was "ideally suited" for the Chinese market because of its ability to be adapted for a number of uses, from aerial surveying to skydiving to firefighting, Camp said.
Projections for how many planes would be required ranged between about 20 a year initially, to around 200 a year in several years time. Currently Pacific produce around 12 of the P-750 model a year, but it has capacity to increase this to around 30 annually, Camp said.
"The 200 number is mind boggling for us but with the support of Beijing Aviation under the joint venture we'll be able to handle it," Camp said.
"They recognised us as, although a small company, we've got a wealth of experience over the last 65 years that they can tap into."
Beijing Automotive has annual turnover of around US$35 billion (NZ$41b), with joint venture agreements with some of the world's largest car companies. It owns SAAB.
Pacific has around 120 employees at present, and while it would not be taking steps to address increased demand, Camp said the deal was likely to create "dozens" of new jobs.
The deal would in the longer term lead to production of Chinese aircraft for China, Camp said, although there were no existing plans to close production in Hamilton.
The company is due to be paid a visit by Prince William next month, where it is due to announce plans for a new model, Camp said, as well as taking the prince on a flight in one of its planes.