Barring political intervention, Triumph Aerostructures will likely have to move its Vought aircraft components production and 2,400 employees out of a historic west Dallas facility over the next 18 to 24 months, its top area executive said Wednesday.
Jeff McRae, chief executive of the Vought division, said in an interview that Triumph cannot profitably continue to operate at the Dallas facility under lease terms being demanded by American Brownfields, which is acquiring the 425-acre site from the U.S. Navy.
McRae said Triumph would like to keep the operations in North Texas, and has already had discussions with officials in Dallas, Tarrant and Ellis counties about possible sites to relocate work in a phased pullout from the Navy-owned aircraft manufacturing complex first opened during World War II.
"Our planning as we were going through the last six or seven months [of negotiations] with American Brownfields is we better have a Plan B," McRae said. "Our Plan A is to stay here."
On Tuesday, leaders of UAW Local 848 called for political leaders in Austin and Washington to stop the sale of the property, saying its members' jobs are in jeopardy.
McRae said Triumph's goal will be to relocate in the area and retain its skilled and experienced workforce, saying the company has had multiple unsatisfactory experiences trying to move work from one part of the country to another.
"The folks on this property have built commercial and military planes for a long time," McRae said, "and that's not something we want to lose."
Triumph, which is based in Berwyn, Pa., has begun construction of a new assembly plant on a 100-acre site in Red Oak, in Ellis County, that will produce wings for Bombardier business jets. The new plant, McRae said, will only occupy about 25 percent of the site, leaving plenty of room for expansion.
Triumph, a publicly traded aerospace supplier, acquired Vought Aircraft Industries in June 2010. The Dallas operation is now known as the Vought Integrated Programs Division. The division builds major components for the C-17 cargo plane, V-22 Osprey and H-1 Black Hawk helicopters and wings for Gulfstream business jets.
Triumph's nearby Grand Prairie operation is the Vought Commercial Division, which builds components for Boeing jetliners. It would not be affected by the sale of the Dallas property and, McRae said, could eventually get some additional work.
Triumph and Vought have historically paid about $8 million annually to lease the Dallas plant, with 50 percent or more of that spent with the Navy's agreement to make capital improvements and major maintenance of the facility, McRae said. Last year, the Navy asked for an all cash payment.
American Brownfields, McRae said, wants a 40 percent increase in the cash lease payments and for Triumph to pay for all future improvements including the huge environmental cleanup bill for water and soil contamination largely left behind by years of use of the adjoining Dallas Naval Air Station.
The Navy and the General Services Administration have estimated the long-term capital expenditures required at the plant at $120 million, including $27 million in environmental cleanup.
Triumph, McRae said, estimates those costs and the lease increase would effectively double the company's annual cost of operating the 5 million square-foot manufacturing and assembly plant.
The bulk of that cleanup is centered on two heavily contaminated ponds known as Cottonwood Bay, south of the Triumph facility, that McRae said were never connected to the aircraft manufacturing operations.
Triumph made an offer to buy the facility from the Navy, but McRae said the company refused to take on the cost of the environmental problems. The Navy and GSA ruled the bid non-compliant.
American Brownfields, formed by Dallas real estate investor Stuart Jones, has agreed to pay $375,515 for the entire property and assume responsibility for all capital improvements and environmental costs. The sale is due to close Aug. 30, although it could take longer.
A spokesman for American Brownfields said he had no idea how Triumph arrived at its claim that its operating costs would double. Robert Riggs, the spokesman, said Jones has twice offered to maintain the existing lease until new terms can be negotiated.
"American Brownfields is feeling blindsided" by Triumph taking the rent dispute public, Riggs said, and believes Triumph is just using the dispute as political cover for longer-term plans to reduce the size of its workforce.
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