Expect more cuts and some job reassignments at Cirrus Design Corp. in the coming weeks as the Duluth-based company adjusts to softer-than-anticipated demand for its propeller-driven airplanes and steps up efforts to develop a new jet aircraft.
This past week the company produced just three airplanes, operating at less than 20 percent of its designed capacity of 16 planes per week.
Cirrus CEO Brent Wouters acknowledged Friday that additional layoffs will be necessary, although he said the magnitude of those cuts remains to be determined.
The layoff outlook would be far worse were it not for Cirrus' continued push to develop a new personal jet. Wouters said that a number of workers who are no longer needed to support the company's propeller-plane operations are being redeployed to assist with the jet initiative.
"We have made a number of reconfigurations with the goal of accelerating the jet program," Wouters said.
ADVERTISEMENT
Cirrus aims to have its new jet certified by the Federal Aviation Administration and ready for production by the end of 2011, Wouters said.
The five-seat Cirrus Vision SJ50 jet is expected to sell for about $1 million. Cirrus already has received more than 400 jet orders, each accompanied by a $100,000 deposit.
"We are increasing our focus on the jet, because that is going to be our future engine for growth in my estimation," Wouters said.
Amid the economic downturn, sales of propeller-driven airplanes have fallen off sharply, resulting in layoffs at Cirrus, Cessna, Piper, Hawker Beechcraft and several other companies.
Cirrus has eliminated about 250 positions since September 2008, and another 100 workers remain on furlough.
At present, the company employs 655 people in Duluth, 150 workers in Grand Forks, N.D., and 33 staffers in other cities.
Wouters characterized the current demand for propeller-driven airplanes as "awful," but he said he sees promise, particularly as Cirrus approaches new institutional and business customers that may be in a position to purchase fleets of airplanes. Wouters also sees growing opportunities abroad. He pointed to a deal Cirrus is pursuing in Indonesia for 70 to 100 airplanes. Wouters said he is aware of three other prospective fleet deals of similar size in the Far East for which Cirrus intends to compete.
