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Posted on Sun, Apr 4, 2010 : 6:02 a.m.

Aernnova slows Ann Arbor hiring plan due to sluggish aerospace market

By Nathan Bomey

Aernnova.JPG

Juan Carlos Ortiz (right), managing director of Aernnova Engineering U.S., said Aernnova has had to scale back its growth plan in the Ann Arbor region. But the firm's corporate cousin, Orisol Energy, led by Cliff Williams, is now expanding into the U.S., as well.

Nathan Bomey | AnnArbor.com

Spanish aerospace giant Aernnova, which launched its North American engineering headquarters in Ann Arbor with much fanfare in 2007, scaled back its $10 million growth plan due to new realities in the global economy.

Aernnova’s U.S. engineering operation employs about 50 workers, though only about 15 are regularly stationed at its Pittsfield Township headquarters.

The company had projected in 2007 that it would hire up to 400 engineers within four to five years and 600 over a 15-year period. That plan drew attention from Gov. Jennifer Granholm as a sign of the region’s economic vitality in the midst of a broader downturn.

But Aernnova has not been able to escape the global economic recession, which forced the firm to cut back its hiring plans.

Aerrnova’s aerospace engineering operation relies heavily on revenue from contracts tied to the airplane manufacturing industry. But clients like Sikorsky, Boeing and Embrarier have slowed their manufacturing plans.

“The market is suffering during this crisis really deeply,” said Juan Carlos Ortiz, managing director of Aernnova Engineering U.S. “There are not too many new projects in this market.”

Ortiz acknowledged that Aernnova is behind its original growth plan - the firm was to suppose to have 100 employees by now - and that Aernnova would not reach its hiring goals within five years. But he said the firm still plans to reach that level eventually.

“Three hundred is still a good number,” he said. “It’s not going to happen in the 5 years we mentioned, but that’s our target.”

The slowdown comes as Aernnova’s corporate cousin, a renewable energy firm called Orisol Energy, is developing plans to expand in the U.S. Orisol, whose U.S. operation is led by Cliff Williams, is owned by Synergy, the same holding company that operates Aernnova.

Williams is working from Aernnova’s offices for now. He said Orisol plans to develop wind farms, starting with the Midwest and branching out. The firm plans to hire up to 25 workers nationwide eventually.

“Right now we’re here because we’re leveraging Aernnova’s resources, but we definitely have plans to expand outside of Michigan,” Williams said.

Aernnova has set up about 80 desks at its U.S. headquarters in Valley Ranch Business Park in Pittsfield Township. But the firm likely will have to maintain a conservative hiring strategy for the foreseeable future.

“The whole market is on a standby situation for now from an OEM point of view,” Ortiz said. “2010 is going to be difficult. 2011 is going to be a little more difficult than 2010.”

Still, Ann Arbor economic development officials said Aernnova remains a valuable part of the region’s engineering economy.

“They are clearly one of the leading companies when it comes to aerospace engineering and contract aerospace engineering,” said Michael Finney, CEO of Ann Arbor SPARK. “I still view them as a tremendous company to have here in the community.”

Daryl Weinert, executive director of the University of Michigan’s Business Engagement Center, played an instrumental role in convincing Aernnova to locate its operation in the Ann Arbor region instead of Boston or Atlanta.

Weinert said Aernnova would expand eventually.

“What really has happened since the announcement is the worst recession since the Great Depression,” he said. “Aernnova’s projections, like so many company’s projections prior to the meltdown, were obviously a little optimistic. (But) they’ll be growing, I’m pretty confident of that.”

Contact AnnArbor.com’s Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com or follow him on Twitter. You can also subscribe to AnnArbor.com Business Review's weekly e-newsletter or the upcoming breaking business news e-newsletter.

Comments

Craig Lounsbury

Mon, Apr 5, 2010 : 6:57 a.m.

AAFan@ "There's been a recession, and the associated layoffs, program cancellations and deferrals throughout the aircraft industry have created a temporary surplus of engineering talent. Growth will likely remain challenging until that surplus is reabsorbed by the industry." The challenge of growth is not about the surplus of unemployed engineers, thats actually a positive to growth. "Growth will likely remain challenging" as long as there is "...a recession, and the associated layoffs, program cancellations and deferrals throughout the aircraft industry..." As a side bar I'm planning to hire 1000 engineers by 2020....maybe, it depends on a bunch of unforeseen things. But I'll keep you informed...maybe if somebody calls me out.

CynicA2

Mon, Apr 5, 2010 : 1:56 a.m.

@AAFan... and I'll "bet" you lose, based on historical precedent going back to Bechtel - remember them? Ann Arbor and environs is going nowhere fast, anytime soon.

ann_arbor_guy

Sun, Apr 4, 2010 : 8:26 p.m.

I agree that the recession caught everyone off guard and that they are still an asset to the community. I think we all understand that unforeseen things happen when making a 5 year plan. I bet things will improve, this is a great community.

Sven49

Sun, Apr 4, 2010 : 7:23 p.m.

In 2007 the Michigan Economic Growth Authority board approved a state tax credit valued at more than $18.5 million over 15 years to win the new engineering center. Governor Granholm said the project would create 600 direct and 657 indirect jobs. With only 15 workers regularly stationed at the Pittsfield Township location it seems they are falling more than a bit short--ample reason for cynicism if you ask me. How about this... we get the government out of subsidizing selected companies, reduce taxes to an attractive level for all businesses, and let the market sort things out.

AAFan

Sun, Apr 4, 2010 : 5:37 p.m.

When Aernnova set up shop here, the market for aerospace engineers was very tight. There's been a recession, and the associated layoffs, program cancellations and deferrals throughout the aircraft industry have created a temporary surplus of engineering talent. Growth will likely remain challenging until that surplus is reabsorbed by the industry. Do you find Mr. Weinert's reference to the recession and it's impact disingenous? Or do you believe that whatever the environment jobs can be generated as easily as, say, snide commentary? Ann Arbor remains a great place for business and growth. I'll see your bet and raise you.

CynicA2

Sun, Apr 4, 2010 : 3:17 p.m.

(But) theyll be growing, Im pretty confident of that.... Sure they will, just like all the others - Pfizer, Google, ABN/Citi Mortgage. I wonder how many other companies promising lots of new jobs here will ultimately provide very few? Quite a few, I bet. This place is a joke.