PAC Embarks On Joint Venture

News Release
For immediate release
July 1, 2004

Pacific Aerospace Corporation Embarks On Joint Venture With New Canadian Partner

Leading New Zealand aircraft manufacturer Pacific Aerospace Corporation has secured a foothold in the lucrative North American market by entering into a joint venture with international heavyweight Mecachrome Inc., in Canada.

The joint venture, effective now, is a result of international demand for Pacific Aerospace Corporation's new PAC 750XL utility aircraft. It follows recent American Federal Aviation Administration certification for the flagship PAC 750XL.

Under the new arrangement, which is described as an equal partnership, Pacific Aerospace Corporation will ship partly assembled aircraft from its Hamilton plant to Mecachrome's state-of-the-art manufacturing plant just outside Montreal, Quebec.

Mecachrome is a privately-owned company established in France in 1937. It is renowned for its expertise in precision machining of parts for the aeronautical industry. End users include Airbus Industries, Boeing and Bombadier. Mecachrome also has an international reputation in the manufacture of high performance engines and drive trains used by all the Formula 1 teams.

Pacific Aerospace Corporation's managing director, Brian Hare, says the new joint venture is a major milestone in the company's history and will provide an excellent platform for growth.

"The ability to ship container-loads of knocked down, or incomplete, aircraft to our Canadian partner will ultimately save millions of dollars in freight costs, insurance and other charges associated with ferrying planes to the world's largest market," he says.

Hare cites savings of up to $100,000 per aircraft in insurances alone.

The projections for Mecachrome are for 12 PKD, or partially completed aircraft, to be built next year, 24 in 2006 and 36 in 2007. This is in addition to a similar number of completed aircraft expected to roll off the assembly line in Hamilton over the same period.

Hare stresses that Pacific Aerospace Corporation will continue to manufacture the PAC 750XL in New Zealand and continue all the development work here.

"The Canadian operation will expand to produce more than 100 aircraft per year with parts manufactured in New Zealand. The commitment to build new aircraft in Canada, closer to our main market, is a logical strategic step forward for us and will enhance our marketing efforts in North America, Europe and elsewhere."

Pacific Aerospace Corporation is receiving unprecedented demand for its PAC 750XL with orders coming in from around the world. The aircraft are now operating in the UK, Switzerland, Australia and New Zealand. Imminent deliveries are scheduled for the US and South Africa. The PAC 750XL is thought to be the first new aircraft built in the last quarter century specifically to target the burgeoning adventure skydiving market.

Since Pacific Aerospace Corporation began the PAC 750XL project in 2000, staffing levels at its Hamilton corporate headquarters have increased from 80 to 165. Further increases in staffing and sales will result from the new joint venture. Hare says the company, its sub-contractors and suppliers will need to double their capacity to meet the targets.

"A campaign is already underway to recruit new skilled workers to cope with the demand, with an extra 50 personnel urgently needed in Hamilton and as many as 40 more required by sub-contractors nationwide.

"Securing skilled staff is one of the major challenges facing the company and we are working closely with Government to try to solve this. Offshore recruitment appears likely."

The company also continues to supply and support the CT/4E Airtrainer and Cresco agricultural utility aircraft.

Pacific Aerospace Corporation's role in the prosperity of the region was recognised with its victory in the Waikato Chamber of Commerce Excellence in Exporting Award for 2004. It has also received an export commendation from New Zealand Trade & Enterprise.

END

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