More Cuts May Be Necessary If Economy Continues To Slow

Piper Aircraft CEO Jim Bass had a frank talk with officials in Indian River County on Tuesday -- following the previous layoff of 150 workers, and the potential need to thin its ranks further, if the economy keeps on its unwinning ways.

Despite the gloom, however, Bass and other Piper officials assert the news isn't entirely bad.

The Treasure Coast Palm reports Bass made his comments Tuesday during a special county commission meeting, called at the request of officials who wanted Piper to address news of the layoffs, which were first reported in December.

Bass followed up his confirmation of the layoffs with an announcement the planemaker intends to pursue further installments of a $32 million incentive package down the line... but is holding off on asking for more money until the economy stabilizes.

As ANN reported, Piper received that financial package in May 2008, in exchange for keeping the planemaker's headquarters and production facilities in Vero Beach, FL. Under terms of the deal, the company must meet certain criteria, including maintaining employment levels and ultimately adding workers in the future.

To date, Piper has received the first installment of that money -- $4 million from the county, and $6.67 from the state. The planemaker faces penalties if staffing falls under a minimum level, though Piper is allowed to request an extension as long as two years.

"We think that this is both good for Piper as well as Florida and the county because ultimately it extends Piper's commitment," Bass said of the incentive package.

Bass conceded the first round of layoffs may only be the beginning. "If it gets worse, we may have to have more layoffs, but we hope we won't have to do that," he said. "We hope it will be better, but we also recognize in today's environment ... it could get worse."

Piper has cut back production levels on reduced demand for its aircraft, in line with similar cutbacks throughout the GA industry. 

The company estimates a roughly 40 percent decline in deliveries this year over 2008 levels. "There simply is no need to build planes and have them stacked up on a runway to sit around and rust," Bass (shown below) said.

So far, Piper hasn't reduced pay levels for workers or management, except in cases of reduced work schedules. Bass noted production workers received "two pay raises in 2008."

A spokesman for the company told ANN that even with the current downturn, the community's investment in Piper has already started paying off.

"Piper contributed more than $60 million to the Indian River County community in payroll and purchase of goods and services," the spokesman noted. "The reality is that the incentives have resulted in amazing results -- ROI on the county’s $4 million and the state's $6.67 million is $60+ million.

"When you factor in the ripple effect, estimated at $500 million by the Washington Economic Group, that is more than substantial."

FMI: www.piper.com