MONTREAL — Falling demand for business jets has forced Bombardier Inc. to lay off 800 workers at plants in Kansas and Arizona, the Globe and Mail reports.
The move is the latest in a series of job cutbacks because ofproduction slowdowns at the Montreal-based company in the wake of the Sept. 11 terrorist attacks and an economic recession.
Bombardier said in September that it was laying off 3,800 aerospace workers worldwide and would need to lay off another 2,700 if there was no sign of recovery in the aircraft market within a few months.
Bombardier announced locally late Tuesday that 550 employees at Bombardier Aerospace’s Tucson Completion Center in Arizona will be let go during the next 12 months, and 250 people will be laid off at the Learjet assembly and manufacturing plant in Wichita, Kan., over the next 90 days.
The world’s biggest business jet maker had indicated in the months after its Sept. 26 announcement that heightened air travel security concerns could lead to an upswing in business jet sales as more companies bought or leased corporate jets for safety and convenience reasons.
However, the economic slump has cut into its profit, and new aircraft orders were placed on hold.
“We tend to follow corporate profits, and we’ve had three quarters in a row where profits have been down,” said David Franson, a spokesman for Bombardier Aerospace in Wichita.
Bombardier Aerospace head Pierre Beaudoin told analysts in November that business jet deliveries would slip to 137 in fiscal 2002 from 174 in 2001.
Ted Larkin, an analyst at HSBC Securities in Toronto, said lower demand for business jets could be offset somewhat by a still-robust outlook for sales of regional jets, which bring in higher margins.
Indeed, Bombardier Aerospace has rehired 400 employees at regional jet plants in the Montreal area since the Sept. 26 layoff announcement, spokeswoman Sylvie Gauthier said.
She also said that Bombardier is sticking to its forecast of delivery of 370 regional and business jets for fiscal 2001 (which ends Jan. 31) and the same number in fiscal 2002, but with a different mix of planes.
It’s too early to say whether Bombardier will end up making the full 2,700 additional layoffs, she added (the 800 just announced are part of that number).
Andreas Hoppe, an analyst at BMO Nesbitt Burns in Montreal, said he doesn’t see the recession and post-Sept. 11 climate having any impact on Bombardier’s plans for new business jet models — the $15-million Continental Business Jet (slated for delivery in 2003) and the $33-million Global 500 (set for 2004).
He also believes that the downtown in the aerospace market will be offset somewhat by sales in Bombardier’s ground transportation division.
Bombardier became the world’s largest railway equipment manufacturer last May when it bought DaimlerChrysler AG’s Berlin-based Adtranz unit.
Bombardier also makes recreational vehicles, such as snowmobiles and personal watercraft.
Its shares closed at $15.95 on the Toronto Stock Exchange yesterday, down 74 cents.