Bell Helicopter is closing its Lafayette Assembly Center.
The move comes as Louisiana Economic Development is terminating its Cooperative Endeavor Agreement with the company and seeks recovery of millions of dollars in financial incentives it has provided.
Louisiana provided $26.3 million to the company since 2013 in an effort to host aerospace assembly operations—first for a proposal to assemble 505 JetRanger X helicopters and later, as an alternative, 525 Relentless helicopter subassembly operations.
“Effective Monday, Aug. 20, Bell began taking steps to close its Lafayette Assembly Center and has begun transitioning 525 cabin subassembly work to [Bell’s facility in] Amarillo, [Texas],” said Robert Hastings, chief of communications at Bell, in a statement provided to Vertical, a magazine covering the civil helicopter industry in North America. “Without economic incentives, Bell cannot continue operations at the [Lafayette] facility.”
LED issued a statement Tuesday, citing “four years of underperformance by the company and a failure to produce either of the agreed-upon operations.”
“From the beginning of this project in 2013, LED valued Bell Helicopter as a world-class manufacturer with world-class aerospace products,” LED Secretary Don Pierson said in the statement. “We regret that our experience with Bell Helicopter has left the State of Louisiana with no other choice but to terminate the CEA for a once-promising project.”
When global demand for helicopters softened, Bell Helicopter opted to move assembly of the 505 JetRanger X aircraft from Louisiana to Canada. The company proposed substituting cabin subassembly—not full assembly—of its 525 Relentless helicopter instead, along with defense-related manufacturing activities, at the Lafayette Aircraft Assembly Center. Negotiations in 2016 led to an amended CEA in 2017 that enabled the company to hit a lower employment threshold of 95 new direct jobs instead of the originally committed 115 new direct jobs, and Louisiana extended the term of the CEA from 2029 to an ending date in 2031.
“Under the amended CEA, Bell Helicopter failed to achieve continuous commercial 525 Relentless cabin subassembly operations by Dec. 31, 2017,” Pierson said. “In February 2018, Bell Helicopter unilaterally informed the State of Louisiana about its proposal to move the eventual 525 Relentless helicopter cabin subassembly operations from Lafayette to Amarillo, Texas, and to substitute other nonassembly operations in Lafayette.”
Today, Bell Helicopter employs just 22 at the site, falling far short of its goal of 95 new full-time jobs in 2018.
“Despite LED’s efforts to accommodate Bell Helicopter, the company never identified a path forward for meeting its obligations to the state of Louisiana,” Pierson said in the statement. “The State of Louisiana has met its obligations for the project; Bell Helicopter has not.”
LED seeks a settlement with Bell; multiple media reports have said the state is owed approximately $16 million.
Declining oil prices have taken their toll on helicopter transport firms. The oil and gas industry accounts for as much as 40% of the roughly $6 billion annual sales of helicopters for civil use, making it the largest non-military segment, according to aerospace research firm Teal Group.