Hawker Beechcraft issues 350 layoff notices in Wichita, gives timeline for Machinists layoffs
12/20/2010 5:53 AM
08/08/2014 10:00 AM
Hawker Beechcraft distributed 60-day layoff notices to 350 salaried employees Friday and confirmed a timeline by which it will eliminate about 800 union jobs.
Hawker Beechcraft, which employs about 6,000 people in Wichita, initially announced the nonunion layoffs in September.
The market for new production aircraft is not improving as the company hoped, CEO Bill Boisture has said. He said the market has been flat to slightly down, and conditions suggest an upturn is at least a year away.
He said Friday in a letter to employees that the company has taken a number of steps in the past 12 to 18 months to reduce costs.
"These decisions and actions are intended to sustain and improve the company's financial strength and improve competitive capability during a very difficult time for the business aviation industry," he said.
Boisture said that the 800 Machinists union layoffs, announced last week, will be completed by August and the work will be transferred to third-party suppliers and the company's plants in Mexico.
The timeline appears to have accelerated.
Earlier this week at the National Business Aviation Association convention in Atlanta, Boisture said the 800 jobs would be eliminated in the next six to 18 months.
According to Boisture's letter:
* Operations in Plant I will be moved out by August, reducing employment by about 470 people.
* Operations in Plant II will by moved out by May, reducing employment by about 30 people.
* King Air-related back shop operations will be moved out of Plant IV by August, reducing employment by about 195 people.
* Electrical and upholstery in Building 94 will by moved out by July, reducing employment by about 80 people.
* The third and final phase of outsourcing logistic center operations will be complete by January, reducing employment by another 45 union employees.
Boisture also said in the letter that the Hawker 200 light jet, introduced at the convention, will be assembled in Wichita. Interior installation, paint and delivery will be done at Hawker's plant in Little Rock, Ark.
Last week, the Machinists union, which represents about 2,600 employees, rejected a seven-year contract offer from the company that would have cuts wages by 10 percent and increased health care costs, among other things.
Boisture said that layoffs of salaried nonunion employees in the past two years have saved the company approximately $4.5 million in health care insurance costs and $5.7 million in 401(k) contributions.
"Our salaried, nonunion employees have also foregone annual merit salary increases that have saved the company an additional $15 million," Boisture said.
"In addition to personally taking part in the... cost-cutting measures, the management team of the company has shown its commitment to building this company for the future by investing $6 million of their own money in the company's stock."
Boisture said Hawker Beechcraft's senior leadership team has reduced its base salary by 10 percent.
"I voluntarily reduced my contractually established pay by 10 percent in 2009 and elected to take half of my management incentive in shares of company stock," he said.
In the past year, the company has made a major investment in training its factory work force, using the new training center, he said, and quality has improved and scrap and rework have fallen as a result.
Hawker also trained 500 people in what it calls a Super Vision program, which has improved teamwork on the shop floor.
"We believe the training will enable our employees to develop ideas and execute on projects that will save the company several million dollars annually," Boisture said in the letter.
Hawker Beechcraft issued layoff notices to 130 hourly employees in July; the company laid off 245 employees earlier in the year. It laid off 2,700 people in 2009.
In addition, earlier this year it said it would close its Salina plant, with half the work going to the company's plant in Mexico and the rest to outside suppliers and vendors. The Salina plant employed about 240 people.
The company is taking action to make the company smaller and more agile to deliver quality products faster, Boisture said.
As for more layoffs, that wasn't addressed in the letter and the company wouldn't comment further. It also didn't address talk about moving operations to Louisiana.
However, Boisture said Monday in Atlanta that the company will continue to evaluate "all the plans and all the alternatives that we developed" and that more jobs are at risk.
"We have an enterprise that's trying to sustain itself profitably, so it's going to be a series of not small decisions," he said.