US Layoffs Continue

An increasing number of aviation companies are laying off staff in an effort to cope with the challenges of the current economic situation. In November 2008, Cessna notified 500 employees they were to be laid off and a further 50 staff accepted a buy-out package. Those layoffs have only just taken effect and Cessna has recently laid off a further 2,000 staff. This brings the total number of layoffs within the company to 4,600. While the vast majority of the defunct positions are located in Kansas, where Governor Kathleen Sebelius has labelled the move “devastating”, the company’s other plants have not been spared. Cessna’s Bend, Oregon, plant has had its workforce reduced by more than 50 percent as a result of reduced demand, with production of the Corvalis series of aircraft dropping to one a month, down from four.

Cessna’s CEO Jack Pelton said that, while taking the layoff decision was extremely difficult, it was unavoidable if the company was to secure its future. Despite an increase in Cessna’s order backlog of $US1.9 billion (to $US14.5 billion), revenues have fallen and the industry expects that a large proportion of the current backlog will never eventuate. This is because start-up companies are responsible for much of the backlog and Cessna foresees that in the economic situation, few whose business plans include ambitious business aviation assets will succeed. Cessna recently halted the $US13 million expansion of its production facility at Pawnee, although at the same time, the company said that it was continuing with construction of production facilities for its large-cabin Columbus business jet.

Adding to the employment market woes in Kansas is the announcement from Hawker Beechcraft that it will cut at least 2,300 jobs at its plants. Hawker Beechcraft is currently Wichita’s third largest employer, with about 7,500 employees. The company’s CEO Jim Schuster echoes Jack Pelton’s comments that the global economic decline is largely responsible for the reduction in orders and deliveries of new aircraft. He also observed that the spate of recent political and media attacks on general aviation as a business tool had ignored the fact that aviation is a critical component of modern business and the provider of millions of American jobs.

In contrast, the smaller Piper Company laid off only 150 employees in January, while other staff took a reduction in hours to prevent over-production. Piper’s CEO, Jim Bass, said at the time that if the reduction in demand was no greater than the 40 percent level planned for in 2009, the company believed that it would not need to make any further workforce cuts. Then, in early February, it announced a further 300 positions were to be cut, leaving the total Piper workforce at 650. The company still hopes to avoid further cuts.