Possibly 200 This Month; 200 Next

Our ANN News-Spies brought us some sad news from Vero Beach (FL).

The sales falloff brought about by the general softness in the GA market, as well as the specific troubles Piper faces with moving its turbine Malibu Meridian and its Lycoming-engined piston machines, has caught up with the production end of the business, in a big way.

Last month, we related that Piper's beginning-of-year workforce was to be reduced from 1000 to 850. Even though in mid-January, "no additional cuts [were] anticipated," continued inventory buildup has apparently overtaken sales.

The company confirmed Thursday that "there is some cost-cutting" in process, and asked us to hold off publishing, until they could get enough facts together to bring you a coherent story.

Piper's Mark Miller got back to us on Friday, with the facts:

He told us, "There were 150 employees downsized today [Friday]; however, contrary to rumors, there is no shutdown planned. Both the CEO and the management team understand the effects of this action, and it's not something that's done lightly. We only wish that it could be otherwise. We simply had to look at the long-term viability of the company." Doing the best he could with what he had to work with, he pointed out that things could have been a lot worse: "On the other side of this, we were able to save 680 jobs."

The cuts in workforce aren't "layoffs;" unfortunately, they're considered permanent reductions -- as 'permanent' as anything, in this industry...

No 'bankruptcy contingency'

However, "The rumors of a bankruptcy," Mr Miller told us, "are just that. The company is moving toward staying profitable -- we're not looking at anything having to do with bankruptcy -- that is not our goal."

If airplanes were in a boat...

"We're not really in any worse shape than GA as a whole," Miller pointed out. "Reductions in our industry, in GA -- there were RIFs [reduction in force --ed.] of 4500, just last year, accordding to GAMA. With both the prolonged economic downturn, and the threat of war with Iraq, orders have just dried up. It's not just us, either -- we're in the same boat as everybody else."

Also,  the floorplanned aircraft at the dealers still don't have engines. Bad as that is, it hasn't gotten worse. Mark looked back five weeks: "A month ago, the Lycoming recalls were 'the' driving factor; this time, the economy is the big factor." It's a large part, 'fear of the unknown:' "The uncertainty about Iraq -- that is having a profound effect on the market, especially for big-ticket items."

Product announcements still planned for the year.

"We will be coming out with our new products this year, and into the future," he told us. "Engineering remains an integral and vital function in the company. Chuck (Suma, company President) continues at the head of the company, and is at the head of the strategic team. John Gallo is still implementing the 'factory of the future' concept, and that progress continues to be vital to the company."

New Piper has been resilient in the past, and looks to continue the tradition. The 680 employees staying on at Vero Beach are a dedicated lot, and they know that bad times don't last forever.

FMI: www.newpiper.com