Trade and Enterprise is defending its decision to pay Hamilton plane maker Pacific Aerospace more than $100,000 about the same time staff say work was drying up.
The failure of a $20 million deal for 12 of its flagship 750XL planes has led to the axe being swung at the
company and a quarter of the workforce have left, as have senior managers including the chief executive and chief financial officer.
Questions have been raised about whether PAC counted its chickens before they hatched after it admitted it expanded production based on orders that were on "too relaxed terms".
A PAC press release in April last year reported a huge backlog of orders for its 750XL planes, saying: "At $1.7 million per plane, Pacific Aerospace Corporation is sitting on export orders in excess of $440 million over the next 10 years."
That equates to almost 260 planes. Yet the collapse of a promise to buy just a dozen has now led to the big contraction. Forty-five people have lost their jobs, including some recently recruited from Britain.
Economic Development Minister Jim Anderton last year repeated optimistic claims of pending deliveries, saying that export orders between $400 million and $500 million over the next 10 years were "now likely".
In July he announced a $480,000 Trade and Enterprise grant, partly to help fuel PAC's expansion. It was around this time that company staff say work was beginning to dry up.
Trade and Enterprise general manager Neil Maxwell told the Weekend Herald that due diligence was carried out on PAC, including a study of financial forecasts and growth potential.
More than $110,000 of the NZTE grant has been paid out.
New company chairman Neville Jordan says big changes are being made to the way PAC does business.
