Economy Continues To Affect Planemakers With Order Cancellations, Deferrals

We're only a week into the New Year, and two major manufacturers of GA aircraft are already scaling back production schedules and giving notice of still more impending layoffs to their manufacturing workforces.

Last November, Hawker Beechcraft laid off almost 500 employees, and Cessna announced it would cut 500 workers in Wichita and another 165 in Bend, OR. But a continuing downturn in the global economy is spurring further cutbacks.

Hawker Beechcraft Chairman and CEO Jim Schuster sent a letter to employees on January 8, outlining a sobering outlook for 2009 and giving a heads-up of appropriate action that can be expected, Wichita's KSNW-3 reported.

"The general aviation market has slowed; new orders have fallen off considerably; many existing orders have been terminated and used inventory has increased dramatically. Simply put, consumer demand for aircraft and services has declined precipitously," Schuster wrote.

"As a result, we are forced to substantially decrease our 2009 production levels and take the painful step of reducing our workforce accordingly. We are in the process of finalizing our plans and will notify affected employees as soon as possible.

"While this is a disappointing way to start 2009, I believe that making difficult decisions now and sticking to the priorities that have made our company successful will enable HBC to survive this downturn and thrive in the long term."

Announced in a memo last week, Cessna Aircraft's CEO Jack Pelton had similar news for his company's employees.

"As the global economic crisis has continued to deepen, we have to further reduce the 2009 production schedule, and this will regrettably result in additional workforce reductions," Pelton said.

Pelton reflected on last year's strong beginning and subsequent downturn. "The first half was full of promise for the future. The second half of the year ended by not only putting on the brakes, but also backing up a bit," he said. "The domestic market remains very soft, and the international markets that were very strong a year ago are now quiet."

Cessna spokesman Bob Stangarone said it had not yet been determined how many employees would be affected by the upcoming layoff, but sources told the Wichita Eagle that the number is expected to reach 1,000 or more.

FMI: www.hawkerbeechcraft.com, www.cessna.com