TBR

Mary Carr Mayle | Sunday, May 27, 2007

When Savannah-based Gulfstream Aerospace announced a $300 million expansion plan last year, it was clear that the company had not only survived the economic havoc that 9/11 wreaked on the luxury business jet market, it had come back even stronger.

Gulfstream's Research and Design Center II will more than double company's space at Crossroads Parkway, eventually accommodating up to 1,300 engineers and other professionals. the available a (Photo: Savannah Morning News)

Now that expansion - representing nearly a million square feet in manufacturing, sales and service facilities and about 1,100 new jobs - appears to be expanding.

Gulfstream senior vice president and general counsel Ira Berman, offering an update on the expansion to roughly 500 businesspeople at Savannah Economic Development Authority's annual luncheon last week, said the company would surpass its original estimates.

"We now expect the total investment and job creation to be far in excess of what was originally promised," he said.

A new sales and design center is open, the first phase of the new service center will open next month and the steel is going up for the new manufacturing facility on the main campus, he said.

It can't happen a minute too soon.

With a backlog of nearly $8 billion in orders, the Savannah plant has increased production to more than 80 aircraft this year, Berman said.

"That means that, on average, we're rolling out a plane every four days," he said.

'You supported us all the way'

The unprecedented growth Gulfstream is experiencing is all the more impressive in light of where it was just four years ago.

In 2003, the luxury business jet maker - feeling the pinch of a sluggish economy still reeling from the terrorist attacks of 9/11 - announced it would lay off about 1,000 workers companywide and furlough another 1,000 for a month at its Savannah manufacturing facility to intentionally slow down production.

Former Gulfstream president - now president emeritus - Bryan Moss, who took the reins shortly after the announced layoffs, said a number of factors contributed to the downturn, from the 9/11 terrorists attacks to the general slowdown in the economy.

In a June 2003 interview with the Savannah Morning News, Moss acknowledged the difficulties the monthlong work stoppage would create for Gulfstream employees.

He expressed confidence that the company would come back from its deficits, citing its work force as its No. 1 asset.

"Our greatest single strength is our people," he said at the time. "At every step of the way, they have demonstrated commitment to our company, to our goals and objectives, to our customers and to each other."

Less than three years later, he addressed those same employees when announcing the company's expansion plans.

"After 9/11, we had to make some hard decisions about our business, but you supported us all the way.

"Without that support, we wouldn't be making this announcement today."

Gulfstream now employs about 7,900, and the majority are based in Savannah.

The market edge

While employee loyalty certainly helped, most aviation insiders agree the impetus behind Gulfstream's 180-degree turnaround was the company's ability to curtail costs, increase efficiencies and position itself for re-emergence as the market for corporate aircraft began to come back.

And when the market did come back, it came back stronger than before, said Paul Nisbet, president of JSA Research Inc., a Rhode Island-based firm specializing in independent aerospace equity research.

"It's especially strong in large business aircraft, a niche where Gulfstream doesn't have a lot of competition," he said. "Probably Bombardier's Challenger 300 is the closest."

And Gulfstream business jets are the most profitable in the industry, he said.

"After 9/11, their margins dropped from the high teens to the high single digits," Nisbet said. "Now they're back up in the middle teens and still climbing.

"They're obviously doing something right."

And those ambitious expansion plans? Right on track, Nisbet said.

"We see no signs of an economic downturn, especially world wide - and remember, Gulfstream is a worldwide company," he said. "They should be fine."