What the acquisition likely means for Diamond’s future in GA.
The truth is that increasingly the future of light GA manufacturing in the United States is an airway that goes directly through China. So like it or not, our aviation fortunes are inextricably linked to our nation’s relationship with the Asian world power.
With this week’s announcement that a Chinese firm had purchased a controlling share in Diamond North America, there are now a number leading GA manufacturers essentially owned by Chinese interests. They are Mooney Aircraft, Cirrus Aircraft and now Diamond Aircraft. Piper is owned by the government of Brunei. Cessna and Beechcraft, both Textron Aviation companies, are U.S. owned. Furthermore, major powerplant manufacturer Continental Motors is also Chinese owned.
To get feeling for how the new ownership will affect Diamond short term, it’s probably best to look at how it’s affected companies in a similar boat.
Mooney International, formerly Mooney Aircraft, a longtime manufacturer of high-performance retractable gear single-engine airplanes, was out of business just a few years ago when Chinese investors backed the purchase of the company. The result of the purchase was a reinvigorated Mooney, a company that has launched significant upgrades to its two existing models and is in the process of launching a pair of innovative diesel powered models, as well. The signs of investment are evident at the company’s Kerrville, TX, manufacturing facility, with scores of improvements, including large machine tools and facility upgrades. Mooney has yet to hit its stride in terms of sales, and the certification of its Ultra editions of the Acclaim and Ovation are taking longer than the company had anticipated, but there’s great optimism at Mooney, and that’s a result of the investment that the new owners have made in the brand.
Cirrus Aircraft was in deep financial trouble and struggling to finance its single-engine jet project when it was purchased by Chinese company China Aviation Industry General Aircraft (CAIGA). The investment was immediate and the change in the company’s fortunes was nearly immediate as well. Today Cirrus has earned type certification for its single-engine jet, the Cirrus SF50 Vision Jet, and has delivered the first customer example. It continues to sell between 250 and 300 SR-model airplanes a year, as well, at an average of around $750,000 apiece.
So based on these results, the probable outcome of the Chinese purchase of Diamond North America is that it will finally get the funding it needs to compete in the marketplace on a level field with its better financed competitors. That’s all good for consumers.
The bad news, of course, is that our market is now largely controlled by foreign interests. That’s a bit of a blow to an industry that in many ways defines the American ideal, one of hard fought personal individualism, geographic exploration and open-skies freedom. From a political perspective, the large scale ownership of U.S. GA companies makes the political relationship between Washington, D.C. and Beijing critically important (as if it’s not already critically important enough).
With the incoming Trump administration, which has talked tough with China, including proposals for stiff tariffs and questions about the One-China policy, no one quite knows how the relationship will play out in the short term. Prospects of frosty or tense relations with the country that backs the operations of a huge percentage of our light GA industry is unsettling. When it comes to general aviation manufacturing, stability is king, and continued investment in light GA is probably linked at some level with rhetoric cooling down on both sides and business getting back to business. In terms of the future of new, light GA aircraft, we all hope that is what happens.
With the passage of the new Part 23 regulations looming, however, the prospect of a reinvigorated homegrown U.S. light plane manufacturing boom should not be discounted. Which would make the light plane market a whole new ballgame. Interesting times, indeed.