Textron is laying off 875 people including some in its aviation division and closing some facilities just before Christmas as part of a restructuring plan outlined in a Securities and Exchange Commission filing on Thursday. The company announced on Thursday that it would lay off an unspecified number of salaried employees but refused to offer details. The Wichita Eagle uncovered the SEC filing that shows the length and breadth of the restructuring but doesn’t name the facilities that will be shuttered. The filing says the plan will “improve overall operating efficiency through headcount reductions, facility consolidations and other actions.”
The filing covers all of Textron’s divisions but layoffs appear to be concentrated in the aviation division. The exact number of positions affected in the aviation division isn’t specified. “The headcount reductions include business support and administrative functions within both segments,” the filing reads. “At Textron Aviation, the headcount reductions are primarily related to engineering positions, reflecting completion of the Longitude certification activities and reduced requirements for ongoing development programs.” Textron says it will cost between $65 million and $80 million in severance and facility closure costs to accomplish the restructuring.
The filing is for Textron, not specific to Textron Aviation. Textron Aviation is not closing any of its facilities, those are happening in other business units within Textron.
Copied from SEC filing: “The restructuring plan principally impacts the Textron Aviation and Industrial segments. In the Textron Aviation segment, we conducted a review of our ongoing workforce requirements, resulting in the initiation of targeted headcount reductions and other actions to realign our cost structure.”
This looks very specific to Textron Aviation. Naturally, the first and primary way modern companies reduce costs is to “reduce headcount”. A “review of our ongoing workforce requirements resulting in the initiation of targeted headcount reductions” tells me the Latitude is not selling well. Shareholders want promised returns on investments. So, there is no need for further developments on an airplane that appears to have a limited future. Between severance and facility closings, tooling reductions, including 2020 cash expenditures to accomplish all this, Textron will spend 140 million dollars to stop further losses.
All of this in an unprecedented boom economy, with both military and civilian pilot, mechanic, production, and aviation engineering manpower shortages at equally unprecedented highs. More evidence of the continuing saga of aviation mismanagement as another aviation “giant” too big to fail, scrambles to meet shareholder “expectations”. Apparently, aviation business projections of the past and present reality has met once again.
I am amazed how US aviation continues to be almost clueless to profitability but huge on promises and anticipated future growth. Past projections of cost, performance, and production numbers that cannot be met whether in poor or great economic times show incredible business ineptness. But the mystery of aviation somehow garners investors who are convinced by some magical aviation marketing and sales potion/Kool-Aid only available to aviation investors dispensed only by aviation companies that as Bullwinkle would say to Rocky regarding pulling the proverbial rabbit out of the hat…” this time fer sure”.
If we cannot figure out how design, produce, and sell conventional certified airplanes at a profit…big or small, it should be interesting to see how well the V-TOL, Electric, and supersonic aviation landscape will look like in 10 years.
Thank the Lord for experimental aviation. It has spawned several well run companies such as Scaled Composites, Van’s, and Dynon among a few others. They have proven that a responsive, customer oriented, well run aviation company can be innovative and profitable. However, those are exceedingly rare business attributes in present day certified aviation. Textron should be very thankful for Van’s and all those 10,000+ Lycoming powered RV’s currently flying.
“Thank the Lord for experimental aviation”
I think you nailed it.
Low regulation & low liability means high innovation and lower cost.
Ditto to what Mark F said.
It’s not so much that the Latitude isn’t selling, it’s that they finished the Longitude and don’t have anything else in the development pipeline:
“…the headcount reductions are primarily related to engineering positions, reflecting completion of the Longitude certification activities and reduced requirements for ongoing development programs.”
Pity they didn’t put them to work on a single-engine piston design that wasn’t 50+ years old.
The layoff’s are targeted toward the staff supporting the Latitude…their best selling bizjet and the Longitude, just recently certified. These are the two most invested in airplanes in the current lineup. Local Wichita reports say the layoffs are primarily at Wichita and the SEC filing says the restructuring is because of profitably issues. This tells me that not enough ROI results = reduction of head count. If you are the class sales leader yet have to restructure including laying off 875 people, doesn’t that send a message of trouble in aviation paradise?
Nailed it! “ I am amazed how US aviation continues to be almost clueless to profitability but huge on promises and anticipated future growth.”
Christmas is never a good time for employees of companies whose fiscal year and calendar year coincide. The end of the fiscal year is when companies realize the scope of their lack of profits and begin the blood-letting to “restructure” their business. “Improve overall efficiency” is just corporate speak for mass layoffs, none of which ever happen at the upper level of management. Textron made the financial decision years ago to concentrate on building high profit margin biz jets, but now that is not providing the hoped-for returns. If I were employed in engineering or production at the single engine shop for Cessna, I would be keeping my resume sharp. They have already canned the Skycatcher and TTX/Corvallis/Columbia. How much longer will management tolerate making a dozen or so 172s or 182s each year?
The Caravan is Textron’s idea of a single.
Somebody do something!