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Published March 29, 2011, 02:23 PM

Cirrus CEO Defends Sale to Chinese Company

The chief executive of Cirrus Industries Inc. defended the sale of the Duluth-based plane manufacturer to a company controlled by the Chinese government, saying the sale was needed to save thousands of Minnesota residents' jobs.

By: Associated Press,

MINNEAPOLIS (AP) — The chief executive of Cirrus Industries Inc. defended the sale of the Duluth-based plane manufacturer to a company controlled by the Chinese government, saying the sale was needed to save thousands of Minnesota residents' jobs.

CEO Brent Wouters sent letter Monday to U.S. Rep. Chip Cravaack, R-Minn., who claimed in a Friday letter to Treasury Secretary Timothy Geithner that the sale of Cirrus to China Aviation Industry General Aircraft Co. would cause "hundreds of American families" to "lose their livelihood."

Wouters says Cirrus needs an infusion of capital to continue operating, the Star Tribune reported. The company, which has cut its workforce at plants in Duluth and Grand Forks, N.D., has seen sales slump since 2006, although Wouters has said Cirrus had $200 million in sales last year and is close to breaking even.

Cirrus is working on a new jet, to be unveiled in 2014, that will cost an estimated $140 million to develop. While Cirrus is seeking the cash to pay those capital costs in its sale to the Chinese company, Wouters insisted that the new jet would be built in Duluth or Grand Forks.

Cravaack fears the aircraft might be built in China instead. The congressman told Geithner that an American suitor for Cirrus might make a counteroffer to the Chinese. But in his letter to Cravaack, Wouters said that was "inaccurate."

Cravaack said he still has concerns.

"The Midwest is littered with abandoned factories and plants, in part because of China's artificially low labor costs," he said in a Monday statement.

Former U.S. Rep. Jim Oberstar, who lost his re-election bid to Cravaack in November, helped bring Cirrus to Minnesota from Wisconsin in the 1990s. Oberstar said the Chinese made an agreement with Cirrus to keep jobs in Duluth.

The Cirrus sale was announced in late February and is expected to close in mid-year. Terms of the deal were not disclosed.

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