By Ed Bierschen
Officials with Piper Aircraft Inc. said they will attempt to find other employment for the workers they are laying off.
The company said it will work with other aviation companies and employers to try to place as many of the workers as possible.
Companies interested in hiring these workers can call the Piper Placement hotline at 772-567-4361.
VERO BEACH — Piper Aircraft Inc. on Monday announced it will lay off 150 employees and release 55 contract personnel as a result of a decision to indefinitely suspend its Piper Altaire light business jet program.
Layoffs will begin this week and progress through the end of the year as the program winds down. Employees will receive individual separation packages depending on factors such as the length of time they were employed, said Piper spokeswoman Jackie Carlon.
Contract personnel were let go today. The contract personnel were largely engineers working as independent contractors or through an agency. They were primarily based at the Vero Beach facility. according to the company.
While the Altaire program was on schedule and budget, Carlon said “the market for light business jets is not recovering sufficiently enough or quickly enough for us to continue developing the program under the economic conditions we currently face,”
Employees were being informed of the company’s decision Monday morning. Local government officials involved in securing incentive money for the company a few years ago also were being notified.
“Obviously, it’s disappointing,” said Indian River County Commissioner Peter O’Bryan, the economic development liaison to Piper. “but I think it’s clear that the world economy has not rebounded sufficiently to make it financially feasible to move forward right now.”
In a prepared statement, Piper Interim President and Chief Executive Officer Simon Caldecott said, “Following an evaluation of Altaire development and light jet forecasts, we determined the best course of action for the company going forward is to indefinitely suspend the program, preserving intellectual property and progress to date. Unfortunately and regrettably, this will have serious consequences for many talented Piper employees and for our Piper Altaire customers.”
Caldecott said planned development costs “had risen above the point that were recoverable under foreseeable light jet market projections. The company will not release the budget for the Altaire development program or expenditures to date. Piper will refund the deposits of Altaire position holders or their deposits can be applied toward other Piper airplanes.”
He said the company will step up product improvements for its turboprop and piston-powered aircraft.
“As a result, Piper will increase the number of personnel dedicated to our sustaining engineering function,” said Caldecott. “In addition, the company is initiating third-party engineering and manufacturing services to preserve as much of our talent pool and as many jobs as possible.”
IMPROVEMENTS EXPECTED FOR EXISTING AIRCRAFT
Last week, when the company said it was considering suspending the program, Piper said its employment stood at between 840 and 850 people, with almost 200 engineers and other workers assigned to the development of the single-engine Altaire. It also announced at that time that President and Chief Executive Officer Geoffrey Berger and Executive Vice President Randy Groom were no longer with the company. The company would not provide additional details in regard to the men’s separation from the corporation.
While Piper’s core business of general aviation aircraft has been performing ahead of financial projections this year, Caldecott also has said he anticipates sales being relatively flat for that market next year.
Caldecott said in Monday’s news release that “Without a doubt this event will impact the company, but Piper employees have demonstrated great resilience before to overcome such economic obstacles and I am confident we once more preserve over the long-run.”
At the same time, Caldecott said increased product improvements to the existing aircraft in production and creation of some new engineering and manufacturing enterprises “will not make up for the loss of any of our extremely talented colleagues that have been brought in for the Altaire program. But we will make every effort to preserve as many as possible.”
At one time, Piper officials said they had about 160 advance orders for the new jet, which was redesigned and renamed the Piper Altaire to much fanfare last October. The company over the past year has traveled to events throughout the United States with a mock-up of the aircraft.
Piper had been seen by some industry observers as having a leg up on the competition because of the investment being made into the jet program by its parent company, Imprimis. The corporate finance and investment management firm, in conjunction with the Ministry of Finance of Brunei, acquired Piper in 2009.
JET PROGRAM HELPED FUEL INCENTIVE PACKAGE
The construction of the PiperJet and the jobs it would produce was a selling point company supporters used in obtaining government incentives to keep the company in Vero Beach. The county and state came up with a $32 million incentive package, successfully competing with several other communities that were trying to lure the company away. The package called for providing $12 million in county money and $20 million from the state if the company met certain benchmarks in investments and employment.
The company used about $4 million of incentive money from the county and $6.7 million from the state in 2008, combining that with its own money to make various capital improvements and repairs to its buildings. The company has not met the benchmarks needed for additional payments and could have to repay one-seventh of the money it has already received by the end of the year because of the drop in employment.
O’Bryan said the County Commission at one point will have to address the repayment provision, also known as clawbacks. He thought the county would probably take its cue from the state in how to address the issue.
The county incentive money was spent on local contractors to make improvement and repairs at the facility, O’Bryan said.
They still have 700 employees and are still making that payroll, O’Bryan said.
“Given the world economy, the fact that they have that number of employees working is probably the bright spot,” he said.
Indian River County Chamber of Commerce President Penny Chandler also was disappointed, but maintained the economic incentives given to keep the company here has paid off for the community.
Chandler, citing a study done by the Washington Economics Group showing Piper employees’ annual average wage in 2007 was $40,000, pointed to some of the economic benefits that have been retained in the community throughout the last three years. In payroll alone, she said, the incentive package helped retain about $100 million in the community throughout the past three years. That does not include the spinoff impact from the jobs or the $5 million the company has spent on construction with local contractors, she said.
“Was it worth it,” said Chandler of the incentive package. “Yes, it was.”