Volume 4, No. 12
February 2009


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Ann Arbor Area BUSINESS MONTHLY magazine brings the reader the latest business news and information important to the businesspeople in Washtenaw County. Each month articles cover real estate, legal, Internet, employee concerns and the climate of business in the greater Ann Arbor area. There is news about company employees and feature articles on local businesses. We cover business news from Ann Arbor, Chelsea, Dexter, Manchester, Milan, Saline, Whitmore Lake, and Ypsilanti.

Aernnova Helps Put Ann Arbor
Area Into Aerospace Future

Aernnova Managing Director Juan Carlos Ortiz

Aernnova Managing Director Juan Carlos Ortiz

by Mark Ziemba

Specializing in aircraft component design featuring advanced composite material technology, the Pittsfield Township-based, Spanish private aerospace firm Aernnova Engineering US is leveraging the engineering reputation of the University of Michigan and the technical experience of southeastern Michigan's automotive labor market to point the way ahead for Michigan's industrial future.


Aernnova's Quick Facts
Spain's Aernnova Aerospace launched the Ann Arbor-area office in September 2007 with a $10 million investment and a High-Tech Michigan Economic Growth Authority state tax credit valued at more than $18.5 million over 15 years from the Michigan Economic Development Corporation. The MEDC estimates that the office will directly create up to 600 jobs and indirectly add up to 657 jobs to the Michigan market, pumping $908 million in personal income into the Michigan economy over 15 years.

Aernnova Engineering US employs 22 people and specializes in the design of composite material structures for aircraft. Managing Director Juan Carlos Ortiz expects the office to grow to 200 to 300 people in four or five years. The office is engineering wing and fuselage parts for Chicago-based aircraft company Boeing's 787 and 747 planes, as well as working on landing gear doors for the Dutch-based European Aeronautic Defence and Space Company's French commercial aircraft manufacturer Airbus. The Ann Arbor office is also designing wings for Kansas-based business, trainer and special-mission aircraft manufacturer Hawker-Beechcraft.

Spun off from Grupo Gamesa Corporación Tecnológica in April 2006 and owned by Spanish company Synergy Industry and Technology SA, Aernnova Aerospace earned an estimated US $736.3 million (€500 million euros) in 2008 and employs about 3,900 people. It provides engineering, manufacturing, assembly and product support of large metallic or composite material structures for aircraft.

Aernnova Sees Ann Arbor Area as New Aerospace Nexus

Aernnova's US operations tap into a local engineering resource that is already fueling a new aerospace industry. Aernnova's office joins Ypsilanti Township's General Dynamics Michigan Research and Development Center for intelligence, reconnaissance and surveillance, which grew out of UM's Michigan Aeronautical Research Center, and Swiss-based, German manufacturing firm Liebherr International AG's Liebherr-Aerospace Saline.

Aernnova located its US office in the Ann Arbor area to take advantage of the skilled talent pool, especially one fed by the University of Michigan College of Engineering, ranked ninth in engineering graduate schools by "US News & World Report" in 2008, and other technical schools. The company chose the area over southern US locations with well-established aerospace clusters of industry, including Atlanta, Georgia, with its fourth-ranked engineering graduate school at the Georgia Institute of Technology and nearby aerospace companies such as General Dynamics-owned Gulfstream and branches of Lockheed-Martin and Boeing.

"The University of Michigan here in Ann Arbor is one of the best in the country," says Aernnova Engineering US Managing Director Ortiz, who holds an M.B.A. and has a background as a stress analysis engineer. "The rest of the universities in Michigan are also very good," he adds, "especially in preparing mechanical and aerospace engineers."

A former employee of General Motors and helicopter company Sikorsky Aircraft, Aernnova Engineering US Business Development Manager J. Gregory Sweeney helped Aernnova choose the location of its US office. Sweeney's research actually suggested staying away from heavily established aerospace centers.

"You're the last guy trying to go after very scarce resources," says Sweeney.

Instead, Sweeney realized that it would make more sense to look for areas well-suited to aerospace with an emerging industry in the field.

The downturn in the auto industry offers an opportunity for Aernnova to employ skilled engineers with very relevant experience.

Managing Director Ortiz says, "Seeing as the automotive sector is not doing that well, that means potentially that we will have access to a very nice pool of talented people that would be willing to go from the automotive industry into the aerospace industry."

Although there would be a transition for automotive engineers, "it's very workable," says Business Development Manager Sweeney. "It's a much easier transition if they are already familiar with the design software." Sweeney says that "the 3D software that two of the Big Three use for designing automobiles is the same software that Aernnova uses with most of its customers: CATIA." CATIA refers to French software company Dassault's Systemes' popular computer-aided design, engineering and manufacturing product lifecycle management software known as Computer-Aided Three-dimensional Interactive Application.

The University of Michigan's Business Engagement Center and Ann Arbor SPARK provided vital assistance to help the company decide to move to the area. Sweeney spoke in early 2007 with UM BEC Interim Executive Director Daryl Weinert, who helped him connect with Ann Arbor SPARK and communicate with the UM College of Engineering's Department of Aerospace about the familiarity of students with CATIA.

Aernnova also wanted to locate its US offices in a place that was both hip and family-friendly. So far, its instincts for the Ann Arbor area have proven rewarding.

"If you want to raise a family, it's really nice to live here," says Ortiz, who lives here himself.

Sweeney adds, "Recruiting has been no problem."

Aernnova Poised to Grow With Aerospace's Global Upward Trend

Certainly last summer's peaking oil prices and global economic woes have affected airline travel around the world, but the aerospace manufacturing industry is still growing.

Ortiz admits that the American and European airline travel industry is struggling, for reasons other than just fuel prices. "There are too many airlines," says Ortiz. "The pie is this big and the pieces of the pie are too small to survive for all of them, so consolidation in the airline industry will have to happen in Europe and in the U.S. sooner or later."

Both rising fuel prices and heavy competition spur development of more efficient aircraft so that airline travel companies can more easily make money, and Aernnova's experience in lighter composite materials suggests a silver lining to these issues.

Ortiz notes that price pressures mean that airline companies "need a new aircraft, which goes farther, faster and with less fuel." To achieve this, "you need less weight, so you need new materials," he says.

"That will require design and analysis and experience in new materials like composites," says Ortiz. "That is the big opportunity for us. The new trend of the industry is basically where we are positioned right now."

The aerospace industry is also still growing due to economic growth in China, India and the Middle East, as well as other parts of the world.

"New aircraft are developed or manufactured because people want to fly more often, to new places, farther, less expensively," says Ortiz. "Many more countries around the world want to travel to other places."

One of two major international aerospace exhibitions where manufacturers typically announce orders, the 2008 Farnsborough International Airshow in July gave some indication of the aerospace industry's trends. Occurring on alternate years in Farnsborough, just southwest of London, the British air show's news included Abu Dhabi airline Etihad's massive order for 205 planes between Boeing and Airbus, totaling US $43 billion in list prices according to London's "The Daily Telegraph." Boeing also indicated at Farnsborough that the Asia-Pacific region will be its biggest market in the future, according to Malaysia's "New Straits Times."

"Aerospace is a business that is growing very much following the world development," says Ortiz. "It doesn't grow linearly, but it grows following cycles. That means that every four or five years there are valleys and there are peaks, but the trend is only to grow."

To find out more about Aernnova Aerospace and Aernnova Engineering US, visit http://www.aernnova.com on the Web.