DULUTH - Cirrus Aircraft begins a multimillion-dollar expansion in Duluth this month, transforming an old airplane maintenance hangar into an innovation center.

The Duluth-based company expects to add 80 engineers over the next three years to staff the 189,000-square-foot facility, first occupied by Northwest Airlines and most recently by AAR Corp., which left during the pandemic.

"Duluth is in our DNA. ... We want to make sure we continue to grow here," said Zean Nielsen, chief executive of Cirrus since 2019, and a former executive with Tesla and James Hardie Industries.

The investment is a strategy to recruit engineers to a smaller city with a tight labor market.

Cirrus initially said it would spend between $10 million and $15 million to renovate the building, but Nielsen said that number will likely grow over the next several years, declining to give an updated figure.

Cirrus paid the city of Duluth $1 for the maintenance, repair and overhaul (MRO) building, and will pay $1 a year to lease long term about 40 acres of land. The agreement with the city included hiring and employee retention parameters.

The city had been paying taxes and maintenance costs on the hangar since the departure of AAR. Both the city of Duluth and St. Louis County granted Cirrus requests for combined tax abatement of $1.2 million over 10 years to help finance the project.

Cirrus is owned by China Aviation Industry General Aircraft, part of the government-owned Aviation Industry Corporation of China. The company is on track for its strongest sales year on record, according to industry data released last month. The personal aircraft maker reported $260 million in billings and 211 planes sold in the first half of 2022.

While the company used to sell far more planes per year before the Great Recession, its $3 million Vision jet, introduced in 2016, is fueling higher revenue. Nielsen said the company is producing one to two jets per week and 12-13 airplanes, with a backlog of orders that should offer some cushion against another recession.

"We are in a great position to weather whatever storm is immediately in front of us, at least," he said.

The company added nearly 1,000 people to its workforce in the last few years, the majority in Duluth, its largest location. But it's been a challenge, Nielsen said, especially this year.

"When you're adding the amount of people we are adding to manufacturing and engineering on an almost annual basis, there is almost [no one left] to hire," he said, a problem compounded by supply-chain issues and housing and child-care shortages in Duluth.

While labor market recovery has been slow, workforce efforts from nearby higher education institutions, like Lake Superior College and the University of Minnesota Duluth, are starting to pay off for growing regional industries like aviation, said Daniel Fanning, vice president of the Duluth Area Chamber of Commerce.

"It feels like we have really turned that corner," he said, "and it feels like Duluth is on the rebound."

About 300 employees focused on research and development will work in the new center on the Cirrus campus, near the Duluth International Airport.

Having prototypes developed in Duluth helps secure the city as Cirrus headquarters, said Chris Fleege, director of planning and development for the city of Duluth.

"The challenge will be finding the employees and making sure there is housing and child care — and Cirrus isn't alone in that struggle," he said.

Nielsen said the company was focused on offering competitive health care and wages, funneling workers from its locations in other cities and investing in quality facilities to draw people back to in-person work.