Quest slows Kodiak production

August 19, 2010

Quest Aircraft, maker of a single-engine utility turboprop aircraft, has slowed production to match the uncertainty both in the economy and in the banking industry where aircraft loans are made.

The firm once had nearly 340 employees, but after layoffs, that number has dropped to 155. The company found that a handful of its customers had hoped to get a bank loan and repay it with funds now in stocks once the market recovers. However, bankers now have tougher rules and are facing uncertainty over how those rules will change, through either regulation or congressional mandate.

“It doesn’t take more than a couple of orders like that to have an impact,” said Paul Schaller, Quest Aircraft CEO. “A lot of people decided their 401K was now a 201K,” he said. He joked that if customers want to borrow $2 million, they need $4 million in their accounts before the bank will talk to them.

A small number of customers have been forced to cancel orders, while others are waiting to take delivery of an order in progress until the stock market rises and bank loans become easier to obtain.

The firm recently delivered nine Kodiak floatplanes to the U.S. Fish and Wildlife Service to help manage migratory bird populations.

“Companies are doing what they have to do,” Schaller said. “We’ve got a balance at this point,” he said, adding that there is no way to predict what the economy will do “Things are not normal in this industry.” He added it is not any fun for the people who are laid off and not fun for company managers who must gear production to match economic conditions. Still, engineering programs to increase the capability of the aircraft are continuing.

The aircraft was originally designed the meet the needs of missionary groups who carry large payloads into extremely rugged airstrips. Improvements include ice protection, external cargo, a gross weight increase, air conditioning, and engineering to make the aircraft easier to build.