Tuesday, April 10, 2012

“Forecasting” on Lake Basebegone: Kestrel, MRRA, and shopping for SOB’s and OPM.

“When you see that in order to produce, you need to obtain permission from men who produce nothing; when you see that money is flowing to those who deal not in goods, but in favors; when you see that men get rich more easily by graft than by work, and your laws no longer protect you against them, but protect them against you…you may know that your society is doomed.”

       – Ayn Rand – Atlas Shrugged

Before we go much further on this post, let’s give credit where credit is due.  A few months back, as the Kestrel cookie was crumbling, a certain State Senator from Brunswick, who we affectionately called Stangali in a recent post, was quoted thusly:

“We’re not losing jobs to New Hampshire, period,” Gerzofsky said Wednesday.

Turns out he was true to his word, and as rare as that is in a politician, we need to praise him for keeping his word.  We did not lose jobs to New Hampshire, just as he assured us.  Nope; we lost them to Wisconsin.

In the same days, it was reported that Kestrel head Alan Klapmeier

said he would never pit one state against another for financial gain.

Did you know that the word GULLIBLE is not in the dictionary? Oh, sure, the word gullible is in your Funk & Wagnalls, but GULLIBLE is not.

That’s because there is a new and higher definition needed to adequately describe the suckers we’ve all been in the Kestrel Kaper, and the larger electro-political phenomena in play here. And your correspondent has been as GULLIBLE as they come in this, and horror of horrors, may actually be complicit in sending you down the same slippery path, if only by editorial errors of omission.

There was a red flag that should have warned us about what was to come early on:

In this photo, the new Kestrel aircraft prototype is flying directly crosswise to the runway pattern at BNAS at low altitude. Our guess is that this would get you a slap on the hand from your flight instructor, no matter who you are and how inactive the runways might be.  Or more appropriately, a kick in the cajones once you’re back on the ground.

Unless, of course, you can simply go back to Photoshop, and change your direction by 90 degrees or so. And you’ve got the right SOB’s covering your six.

As things have played out, the Kestrel Kaper was krosswise with everything about MRRA and their oversight of base redevelopment, award winners though they may be.

First, a confession; it’s no secret that your humble correspondent is cynical, aged, and a bit of a crank when called for. We’ve never done anything to persuade you otherwise. We began our illustrious blogging career following the publishing of a number of our columns on Oxford Aviation in The Ostrich. 

The editors and publisher, whether they realized it or not, worked hard to convince us we should look for another outlet for our efforts.  We’d like to think our work sparked the interest of Steve Mistler, then at The Forecaster, who did first rate investigative reporting on Oxford, and before long, MRRA’s love affair with Jim Horowitz was on the rocks.  FLee Bailey tried briefly to intervene, but he couldn’t make the hand fit the glove, to borrow an image.

We believe we are as ‘self-aware,’ if not more so, than any ‘public official’ or local ‘journalist',’ when it comes to commenting frankly on town matters, especially as they relate to the watershed economic issues of base redevelopment.

Accordingly, when the news first broke of Alan Klapmeier and Kestrel Aviation signing up as the shining star that would be the first step in bringing ‘as many as 17,000’ new jobs to the redeveloping base, creating a revolution in private aircraft development and manufacture right here in our own backyard, we bit our tongue. And trust us, it was a whole lot harder than saying that Harriet Beecher Stowe School is a ‘beautiful new facility.’

We read that Klapmeier believed he could raise $100 million in private investment funding to provide the capital foundation for his revolutionary new aircraft design. We remember wondering how long it would take to recoup $100 million in venture capital when you’re building airplanes that sell for something like $3 million, with a profit in the range of $250,000 each.

Unless our math is wrong, all other details aside, you’d have to sell 400 of those airplanes to amortize the principle of the venture capital stake in your business, without interest or return on investment.  That’s before the business became profitable on its own.

And without any consideration for operating expenses and overhead. But what do we know compared to Director Levesque and Senator Gerzofsky and Congresswoman Pingree, who have far more experience in the private business world than we do?

After all the dirt we dished on Oxford, we decided to shut our big traps on the Kestrel/Klapmeier undertaking, and give them the benefit of the doubt.  Boy, were we wrong.

So Where Are We Today?

We’ll get to the recent Forecaster items in a moment; they reflect back on many of our well known SOB’s, and the various OPM dispensers they employ.

While “Occupy Wall Street” nimrods are busy protesting capitalism, it’s clear there are other aspects of our economic ‘system’ far more worthy of protest, and government is right in the thick of it. Campers and sign carriers should be occupying Washington in protest of crony capitalism.

Kudos to The Forecaster for two items in last week’s Midcoast Edition: a lengthy analysis by Emily Guerin, and a surprisingly frank editorial by Mo Mehlsak.   Now we find out we’re losing Emily to greener pastures; all the best to you, Ms. Guerin.

The two items linked above have some worthy quotes.  Here are a few.

From Mo’s editorial:

Is Kestrel Aircraft the kind of company the state, and the Midcoast Regional Redevelopment Authority, should have been trying to attract, and should officials have done a better job scrutinizing the company before seeming to fall head over heels in love with it?

Guerin's report suggests the answer to the former is probably not, while the response to the latter is yes, definitely.

From Emily’s report:

"One of the hardest things about the aviation industry is convincing the business world that there's a market," Klapmeier said in July 2010.

Klapmeier expressed frustration ….. about how difficult it had been to get the financing he assumed was in the bag.

….a rift between Kestrel and Coastal Enterprises Inc., the Wiscasset-based private, nonprofit community development institution that provided tax credits to the company, led Kestrel to look elsewhere for financing.

We don’t know about you, but an ‘institution’ that hands out tax credits to companies is not a private operation as we see it.  If you are dealing in government provided, taxpayer funded financing, you are, at a minimum, a ‘quasi-governmental’ organization.

"We're stewards of the taxpayer dollar," Spies said. "So across our whole portfolio we're trying to limit that risk."

It only gets better:

Klapmeier told a reporter he was frustrated by the bureaucracy involved to get New Market Tax Credits. He complained about the excessive amount of due diligence required and the "layers upon layers" of assurances he had to provide. Klapmeier wanted to  convince his investors to believe in him with an emotional appeal, not by providing reams of detailed financial information.

"What we are removing from the process of life is the ability for people to rely on judgement," he said. "Is this really the right way to protect ourselves?"

"I believe the fastest way to bring closure to this funding gap, is to utilize political assets to pressure Coastal to honor its commitment," Kestrel spokesman Scott Prinz wrote to Gervais in an Oct. 26, 2011, email.

Imagine if you were seeking a mortgage to buy a home, or a new car loan.  Would you have the guts to complain about the detailed financial information you were asked to provide?  And rely instead on an ‘emotional appeal?’

We’re about through here, but we have one more observation, and that is that Johnny ‘Protocols’ Richardson and FLee Bailey avoided the spotlight like the plague since all this came about.  If even THEY thought Kestrel was a non-starter of a deal, what does THAT tell you?

Solyndra, Kestrel, Oxford Aviation; is there really any difference?  Not really.

What we really need here on the base is a huge windmill farm.  If we were King for a Day, we’d look for expert investors in the local area  to risk THEIR OWN MONEY on such a venture.

Wouldn’t you?

1 comment:

  1. This misadventure is exactly what the Commerce Clause of the U. S. Constitution was written to avoid. If you research the history of its inclusion you will find that its introduction was to prevent States from using their wealth to steal from other. During the preConstitution period states were charging durites on products from other states and charging imposts on goods passing through, taking advantage of their physical position or protecting their local manufactures or agriculture. The objective was to make the price of goods the same throughout the U. S. except for the cost of transportation.
    When a state uses its taxpayers funds to finance a business it makes its products cheaper than that in another state and creates jobs encouraging people to move from one state to another.

    ReplyDelete