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Microcap & Penny Stocks : BRSI...The future of airline safety??
BRSI 0.0516+2.8%12:18 PM EST

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To: Gerald Thomas who wrote (59)2/4/1999 10:05:00 PM
From: Gerald Thomas  Read Replies (2) of 121
 
GROWTH TAKES FLIGHT AT CIRRUS

HOW ALAN AND DALE KLAPMEIER TOOK
CIRRUS DESIGN TO NEW HEIGHTS OF
AVIATION INNOVATION

Saturday, January 30, 1999
Section: B - BUSINESS
Page: 01
Peter Strozniak, Industry Week
Column: Alan Klapmeier

Caption: Cirrus Design Corp.'s SR20 is the first passenger plane to be sold
equipped with a parachute, according to Alan Klapmeier, president of Cirrus.

Like Wilbur and Orville Wright, Alan and Dale Klapmeier were told that
manufacturing and marketing their airplanes would be impossible. And like the
Wright brothers, the Klapmeiers kept working, innovating, creating and dreaming
until they proved the impossible.

The Wright brothers changed the world with their first successful flight nearly 100
years ago. Today, the Klapmeier brothers are changing the general aviation
manufacturing industry (generally small, single-engine private planes and small
business jets), which has been on a slow descent. The Klapmeiers, founders and
owners of Cirrus Design Corp., Duluth, Minn., are manufacturing a new
piston-powered, single engine, four-seat airplane - SR20 - that aviation observers
say will revolutionize and revive the general aviation industry.

Cirrus Design became the first U.S. manufacturer to successfully design, test and
certify an airframe parachute system designed to improve the survivability of a
crash.

We were told from the beginning (our) airplane won't be able to fly. We won't be
able to sell it. We won't be able to certify it - all of which we've done, says
Executive Vice President Dale Klapmeier, 37, who along with his 40-year-old
brother, Alan, president, possesses an unrelenting passion for aviation that began in
childhood.

We were playing with toy airplanes and building model airplanes as young as I can
remember, says Alan, who obtained his pilot's license one month into college. Dale
got his pilot's license while in high school.

Last October, Jane Garvey, administrator for the FAA, presented Cirrus Design
with certification for the SR20. (Lancair in Bend, Ore., also received FAA
certification for its Lancair Columbia 300, a single-engine, four-seat aircraft. The
FAA says the Cirrus and Lancair certificates were the first awarded to U.S.,
four-seat, general-aviation aircraft in more than 15 years.)

THE WRIGHT FOOTSTEPS

Like the Wright brothers, the Klapmeiers had no formal engineering education -
Alan majored in economics and physics and Dale earned a degree in business and
finance. Following college, the Klapmeiers decided to build kit or hobby airplanes
and established Cirrus Design Corp. in 1984. The brothers manufactured their first
airplane in their parents' barn in Baraboo, Wis., not unlike the Wrights' Dayton
bicycle shop.

We kicked out the cows and filled in the troughs with cement, Dale recalls with a
smile.

At the Experimental Aircraft Association convention in 1987, the brothers unveiled
their first kit aircraft, the VK-30. The Klapmeiers taught themselves how to build
an airplane by using both NASA research on composite structures and
aerodynamics and studies by EAA members on improving construction and
performance levels of small aircraft. More important, they learned from their own
mistakes.

The VK-30, with its combination of design advancements that produced a kit
airplane with high performance, quality and size, also established the groundwork
for all Cirrus Design aircraft to come. To focus on the design and manufacturing of
a certified production airplane, Cirrus Design stopped accepting orders for the
VK-30 in 1992.

The company evolved from its rustic roots to a 141,000 square-foot
airplane-manufacturing plant, adjacent to the international airport in Duluth.

Cirrus Design also operates a 67,500 square-foot manufacturing facility in Grand
Forks, and leases a small paint shop in Hibbing, Minn. The company employs 203,
including 40 engineers.

Rare bird indeed

Aviation observers say the SR20 will change the general-aviation industry because
it features state-of-the-art technology, innovative design, improved performance
and a new level of safety never before seen in a single-engine, four-seat airplane.

In its class, there are no other airplanes that come close to the SR20, remarks
Thomas B. Haines, editor-in-chief of AOPA Pilot magazine. For the price
($168,800) there is just nothing else available that offers that kind of performance,
comfort and safety.

Haines, who flew an SR20 prototype, said the plane is easy to fly and has auto-like
features - large, comfortable seats; fold-down rear seats for extra baggage
capacity; and more headroom and rear-seat leg space.

As a fixed-landing-gear aircraft, the SR20's 200-horsepower engine can take it to
speeds of 184 mph or 160 knots and cover up to 800 nautical miles or
approximately 920 miles. But what makes it unique, of course, is that the SR20 is
the only general-aviation plane equipped with the Cirrus Airframe Parachute
System.

Manufactured by Ballistic Recovery Systems Inc., south St. Paul, Minn., and
codesigned by Cirrus and BRS engineers, CAPS is meant for last-resort
emergencies, such as when the pilot loses control of the plane. When an overhead
release handle is pulled, a small rocket deploys the parachute, which slows the fall
of the 2,900 pound aircraft and improves survivability of a crash.

Right plane, right time

When the Klapmeiers decided to develop the SR20 in 1992, the general aviation
manufacturing industry was mired in a severe slump. In 1978 sales of
piston-powered, single-engine aircraft peaked at 14,398. After that, the descent
began. Sales finally bottomed out at 444 in 1994, according to the Aircraft Owners
& Pilots Association, one of the world's largest aviation organizations.

Since then, however, the industry has shown signs of coming back. Cessna Aircraft
Co., Wichita, the general-aviation manufacturing giant that stopped making
single-engine aircraft in 1986, reentered the market after the federal 1994 General
Aviation Revitalization Act was approved. The law places an 18-year time limit on
most product-liability lawsuits against manufacturers.

In 1995 sales of new piston-powered, single-engine aircraft jumped to 515, and
then leaped to 905 in 1997. For the first nine months of 1998 manufacturers
shipped 1,051 piston-powered, single-engine airplanes, up from 567 for the first
three quarters of 1997, according to the General Aviation Manufacturers
Association.

But the Klapmeiers believe the industry took a nose dive for reasons other than
product-liability lawsuits that sent litigation and insurance costs soaring for aircraft
manufacturers.

It did not take us long to realize that there wasn't any added value to buy a new
airplane, Dale says. In 1981 and 1982, a new airplane off the production line was
at this point five times more expensive than a used airplane that was seven years
old, but the airplanes were virtually identical. So where was the incentive to buy
new? There wasn't any.
Bringing innovation
to market

So how did the brothers manage to become the new manufacturing force in
aviation?

One of the things that people often ask is, 'What does it take to do a project like
this? ' My flippant answer is that the first requirement is that you be dumb enough
to start, and then be smart enough to get through it, explains Alan, who jokingly
boasts that he got to be the company president because he is the older brother.

One of the most difficult problems for the growing company was securing private
financing to pay the $40 million price tag for the development and certification
process. Yet their basic approach is applicable across all industries for companies
taking flight.

We've done it by meeting with hundreds of individuals and institutions, having very
long conversations about what happened to the market, why our airplane
addresses the market and what that future could be, Alan says.

Although the Klapmeiers faced repeated rejection from skeptical investors, they
managed to attract about 250 financial backers, most of them individuals. Then last
year Cirrus Design caught a break. National radio commentator Paul Harvey read
about the company on the news wires. In July he talked about the company on his
syndicated program.

Alan says the publicity generated interest from more investors and boosted the
company's credibility.

Part of what we have been trying to tell people is that there is a lot of interest in the
general-aviation industry, Alan says. With Paul Harvey talking about the airplane
some investors took a second look and said, 'You're right, maybe people will buy
this airplane.'

Harvey is a pilot and became a Cirrus Design investor in October, the Klapmeiers
say.

Cirrus Design also received widespread publicity in the national and international
aviation trade press and in some general circulation magazines, and the Klapmeiers
acknowledge that the media publicity has been partially responsible for helping
them secure 213 orders for the SR20, as of early December. A $15,000 deposit is
required for each order.

The company's development also is being financed, in part, with revenues from
government contracts and design agreements with other companies. Cirrus Design
has performed work for NASA, and was hired to build parts for the Tactical
Unmanned Aerial Vehicle, under development by Alliant TechSystems Inc. of
Hopkins, Minn., for the U.S. Army. The TUAV is designed to help battlefield
generals gather reconnaissance video on enemy positions.

Production hurdles

The company's goal is to manufacture 100 SR20s by the end of 1999, and then
400 to 600 annually within five years. The first plane is expected to roll off the line
in February. These production goals will require Cirrus Design to double its work
force. Cirrus Design also has plans to develop other planes, such as a six-seat
aircraft for businesses.

Cecil Miller, vice president of operations for Cirrus Design, oversees two critical
projects. The first is obtaining a production certification from the FAA while gaining
the agency's approval of the company's quality system. Currently, Cirrus Design
cannot move production forward without all parts being inspected by the FAA.
Each part of the airplane also is required to be accompanied by documentation that
details the who, what, where, when, why of each manufactured part.

The second project is obtaining AS 9000, which is the aviation-industry equivalent
of ISO 9000 certification. Miller plans to attain AS 9000 in about 18 months.

To prepare the SR20 for FAA certification, the plane had to undergo rigorous
stress tests to demonstrate its life cycle.

Editor's Note: Cirrus Design Corp., headquartered in Duluth, was featured in the
January issue of Industry Week Growing Companies magazine. This article was
reprinted with permission of IW Growing Companies. Copyright, Penton Media
Inc., Cleveland, Ohio. For more information, visit the magazine's Web site at
www.iwgc.com

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