ANN has confirmed that a large percentage of the Columbia Aircraft manufacturing work-force was laid off Monday, due to the reported lack of critical avionics components needed to finish the aircraft. "Nearly 300" staffers were notified Monday that they were furloughed until components of the Garmin G1000 glass panel system were delivered in sufficient quantity to re-start the production line.

Garmin recently notified Columbia of an inherent problem in the AHRS (Attitude, Heading & Reference System) of its G1000 integrated avionics system that will delay shipments of the Primary Flight Display used in the Columbia 350 and 400. The problem limits aircraft operations to VFR only and causes an inability for Columbia to issue a Certificate of Airworthiness to customer specifications for delivery.

A Columbia staffer noted that other manufacturers were also reporting problems in getting necessary deliveries of a critical component of the G1000 and that they were in the "same boat" as Columbia.

A Columbia statement reports that, "The resultant supply chain stoppage and business interruption is forcing Columbia Aircraft Manufacturing to furlough a portion of its direct workforce as the production line grinds to a halt until the issue is resolved and parts shipments commence. Customer Care, Factory Service Center, Sales, Marketing and Engineering will continue to provide the same level of support during the interim period until parts shipments enable production to begin."

Columbia officials learned of the problem from Garmin last week after other aircraft manufacturers reported attitude failure modes within the Primary Flight Display. The chief concern is that the avionics supplier is unable to definitively confirm when the problem will be resolved or when parts shipments will resume to Columbia. According to Garmin, all G1000 Primary Flight Displays manufactured on or after May 1, 2007 are suspect. 

"This latest supplier-driven interruption is very frustrating," said Columbia President Wan Majid. 

"Our recovery plan was masterfully executed earlier this year and deliveries have been proceeding on target. In fact Columbia has delivered 220 aircraft in the past four quarters - our best performance in company history. However, we simply cannot continue to complete and deliver new aircraft without the functionality and reliability that customers demand. Unfortunately, this means that we have no alternative but to furlough portions of our workforce until the issue is resolved."

Majid confirmed that Columbia furloughed nearly 300 employees from its manufacturing facility. He also stated that it is possible that the Company will have to furlough additional employees if Garmin is unable to resolve the issue and resume component shipments quickly.

"Unfortunately, this problem is completely out of our control.  I am deeply troubled to have to once again ask our valued employees to make this type of sacrifice as the result of supply chain issues.  We will do everything in our power to resolve the situation as quickly as possible, but unfortunately I am not in a position to commit to a timeline at this point," Majid said. The Company is in constant contact with Garmin management and is supporting their efforts for a quick and proper solution.

Just last month, Columbia announced a healthy second quarter for the high-performance aircraft manufacturer, having delivered 55 new Columbia 350 and 400 aircraft in the second quarter of 2007, more than double the number delivered during the same period in 2006. While the Columbia's 2007 delivery pace was ahead of the figures posted in 2006, company officials cautioned that comparing 2006 to 2007 could lead to misconceptions.

"Early 2006 was very challenging for us and our second quarter deliveries in particular were severely hampered by a freak hail storm that delayed delivery of a 66 aircraft," said Columbia President and CEO Wan Majid. "That said, our deliveries are right on plan for 2007, and sales demand has been strong through the first half of the year."

Despite strong sales activity, supplier issues have brought a number of aircraft manufacturers to a virtual standstill or necessitated delays in aircraft production schedules... and a number of them were associated, also, with avionics. Eclipse's switch to a new vendor for its AVIO avionics suite, and the redesign of that system several months ago, cost the company a number of months in production delays.

The Garmin delays, if widespread, may affect quite a few manufacturers and create shortages throughout the GA industry, as the G1000 has achieved a high OEM adoption rate among such companies as Cessna, Diamond, Mooney, Piper and others.

ANN is looking into this issue and its effect on other manufacturers. We expect to update this report as soon as we can contact affected parties during normal business hours, later today.

FMI: www.flycolumbia.com