Aerospace swoops in on history in Savannah
Savannah, Ga. — Can an aircraft manufacturer designing the jets of the future find happiness in a city that has virtually made history its base industry? In the case of Gulfstream Aerospace Corporation here in Savannah, the answer would seem to be yes.
Gulfstream makes the Gulfstream III, a top-of-the-line corporate jet. Asked to describe the craft, treasurer Richard Krajek says, ''It has intercontinental capability; and it, well, costs a lot.'' Specifically it costs around $15 million.
Gulfstream is the only general-aviation aircraft company to be growing during an industry downturn. The company, which had sales of $564 million last year, has been profitable all five years of its existence as an independent enterprise.
Moreover, Gulfstream has seen steady expansion of its work force, made up of avionics and aeronautical engineers and technicians, skilled metalworkers, programmers for computerized machines, and, for the fine interiors of the jets, cabinetmakers, many of them recruited from furniture companies in the Carolinas. Employment here has roughly doubled over the past decade, to 2,800-plus today.
''We've had consistent growth over the past five years, drawing talents where we can get them,'' Mr. Krajek says.
The new jobs have been filled in part by local people who a few years ago would not have found such a lucrative market for their skills, and in part by engineers, managers, and other professionals who have flowed into the area from all around the country.
''It's been a big step up for a lot of these people,'' notes one observer in Savannah. ''They've gone from making $5,000 tractor trailers to making $12 million jets.''
All employees of this non-union company own stock, and officials claim Gulfstream has the lowest turnover in the business.
Savannah has not always been like this. Georgia's first city has been somewhat isolated socially, politically, and economically from the rest of the state. The only city of any size in southeast Georgia, it has been regarded - and has regarded itself - as a kingdom unto itself, ''the state of Chatham,'' it is often called.
Considered the first planned city in the United States, Savannah was laid out in a pattern of parklike squares rather than a plain grid. The city is the home of a significant urban housing restoration movement going back to the mid-'50s, when most of America was jumping into its Fords and Chevies and heading for the suburbs.
A semitropical city of New Orleanian charm, Savannah drips ''history'' the way its oak trees drip moss. It is a popular stop for vacationers heading to Florida and for Atlantans looking for a weekend out of town.
Ironically, Savannah's wealth was preserved by its poverty. Had there been more demand for new offices and shops, the old houses in the city center would surely have been bulldozed in the name of progress long ago.
Savannah was a thriving cotton port until the market collapsed during the 1890s, when it fell into a deep depression and stayed there virtually until the late 1930s.
It was then that the pine trees that had been planted or had simply grown up in the abandoned cotton fields became harvestable. The paper companies took note of the many trees and the abundant water, which their mills use not only in process but also for waste disposal. And so the kraft paper industry was born. It became to the coastal region what textile manufacture was to the part of the state upland from the fall line.
The paper industry remains a massive presence in coastal Georgia, and Union Camp, the big paper bag concern, is the largest employer in Savannah. But kraft paper is a mature industry, unlikely to increase much in production capacity or employment. Gulfstream, however, is on an upward curve, and outside observers call it only a matter of time for it to move into position as the No. 1 employer.
Gulfstream began in the mid-'60s as a branch plant of Grumman, the aviation giant of Long Island, N.Y., making Grumman's corporate jets. But in 1978 the operation was sold to Allen Paulson, an aircraft modification and salvage operator in California, and some partners, who launched a new, privately held firm called Gulfstream American. In May 1980 Mr. Paulson bought his partners out. The following year Gulfstream bought Rockwell International's Commander line of turboprop aircraft, based in Bethany, Okla. These planes sell for $1.35 million to $1.7 million, and the plant currently employs around 800.
Last November the company became Gulfstream Aerospace, and this past April 8 it went public, with Mr. Paulson as president, chairman, and majority (72 percent) stockholder.
Gulfstream's strength is that its main product is a jet that sells for some $ 15 million, says Eliot Fried, chief investment officer and aerospace analyst at Shearson/American Express, which brought Gulfstream public. ''They've had a steady pattern of orders during the recession.''
Says Krajek: ''We went into recession with a huge backlog; what happened during the recession is that the backlog grew smaller.
''But the turboprop end of the business has suffered tremendously.'' The downturn has been so severe, he says, ''We'd need 14 stepladders to get up to a recession.
Its competitors in this market segment, such as Piper, Cessna, and Beechcraft , have likewise been pinched.
Mr. Krajek sees ''encouraging signs'' for the company, ''but it's still not something to write home to the folks about.''
The company is looking forward to bringing out its next model, the Gulfstream IV, to be a slightly elongated version of the Gulfstream III, powered by a Rolls-Royce ''Tay'' engine (Rolls-Royce names its engines for rivers; the Tay flows through Scotland). Gulfstream already has orders for 50 of these planes, expected to be ready for delivery in mid-1986, Mr. Paulson says. ''We're also looking at a plane beyond that.'' A new fanjet, the Peregrine, aimed at executives who fly their own planes, is coming out in Bethany, too.