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July 29, 2013

Spirit AeroSystems announces 360 layoffs

Roxana Hegeman
Associated Press

Spirit AeroSystems is laying off about 360 salaried support and management employees at its Kansas and Oklahoma facilities, the Wichita-based aircraft parts maker announced July 25.

The company said that while it had a ìcost challenge to address, its core business is performing well at unprecedented production rate that is driving its revenue, earnings and cash. Spirit AeroSystems said it remains strong with a ìrobust backlogî of orders worth about $36 billion.

Today’s action is a strategic move to make the company more competitive in a cost-sensitive environment, and results from an ongoing workforce assessment designed to reduce overhead costs, increase efficiency and drive improved performance,î the company said in a news release.

The company declined to break down the layoff numbers between the two affected facilities. Spirit AeroSystems employs 16,000 people globally, including 11,000 at its Wichita, Kansas, headquarters and 2,500 at its plant in Tulsa, Okla.

Spirit AeroSystems, which makes large sections of airplanes assembled by companies such as Boeing and Airbus, saw its first-quarter net income rise 10 percent as demand for commercial planes increased. Deliveries for commercial airplanes rose 9 percent from a year earlier and production is accelerating on several of the key passenger jets made by Boeing and Airbus.

The earnings growth came despite a pre-tax $15 million charge because of higher costs to make the wing for the Boeing 787.

While deliveries of finished 787s were halted for nearly the entire quarter because of malfunctioning batteries, production by Boeing and its suppliers continued. Spirit AeroSystems delivered sections for 17 of the 787s during the quarter, up from 15 during the fourth quarter of 2012.

Union and company officials said affected workers are being given a two-week paid notice. The employees immediately walked off company property after meeting with human resource representatives.

Spirit AeroSystems said it also is offering affected employees severance benefits and career transition services.

Layoffs are never our first response,î Spirit AeroSystems spokesman Ken Evans said in an email. ìWe have and continue to focus on keeping our company healthy and our team for the future intact. We are reducing overhead costs so the company can operate more efficiently.

The Society of Professional Engineering Employees in Aerospace, which represents two bargaining units of engineers and technical workers in Kansas, said its list of affected employees includes 47 engineers and 173 technical workers at the Wichita plant.

ìProduction is high, rates are high, so it is kind of hard to understand why they are laying off the salaried work force, said B.J. Moore, SPEEA contract administrator.

The union is considering litigation, Moore said, noting employees who sign the severance agreement don’t have any recall rights.

Larry Lawson, the company’s new president and CEO, said in May that Spirit AeroSystems would do a ìcomprehensive evaluationî of the development programs in four cities where sections of the 787 and the new Airbus A350 are made: Tulsa, Okla.; Wichita, Kansas; Kinston, N.C.; and St. Nazaire in France. At the time, Lawson said one of the company’s future goals would be to cut costs in the manufacturing of new planes.

Evans declined comment on published reports July 25 that GKN, an aerospace components group, may submit a $5 billion cash and shares bid for Spirit AeroSystems. GKN also declined comment in an email.

Evans said speculation about such a merger would likely be ìa topic of discussionî during the next earnings call, which is expected to be scheduled sometime during the first week of August.




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