MD cut 22% of workforce
from the East Valley Tribune.....
Aug. 26--MD Helicopters, a Mesa-based producer of light nonmilitary helicopters, is slashing its work force by 22 percent through layoffs and involuntary furloughs as the company tries to restructure its finances.
Officials said Wednesday the company has been hurt by a slowdown in orders for its helicopters, which are primarily aimed at the law enforcement and air ambulance markets. "This decision is one of many we are executing on to improve the company's viability while aligning our business needs, financing and market requirements," CEO Henk Schaeken said in a written statement. "Our people are working very hard to work through our current difficulties, and we anticipate that many of these personnel will be brought back once our workload improves."
He also said the job cuts are part of "a comprehensive restructuring strategy for the company," which is a subsidiary of RDM Holdings N.V. of the Netherlands. Schaeken was not available for further comment Wednesday.
A total of 23 employees are being laid off, which means their positions are being permanently eliminated, while another 33 are being furloughed and will be eligible to return when business improves, spokeswoman Kyle Davis said. Following the reductions, about 200 employees will remain at the plant at 4555 E. McDowell Road.
RDM purchased the company from Boeing in 1999 after the merger of Boeing and McDonnell Douglas Corp., taking over what had been the light helicopter division of McDonnell Douglas. In the process RDM acquired the rights to several advanced-technology helicopters developed by McDonnell Douglas such as the MD Explorer and MD 600N. Those aircraft have a no-tail-rotor system that makes them quieter than conventional helicopters. Davis said the world civil helicopter market has been relatively flat in the past few years, while MD is facing increased competition in the United States from European manufacturers such as Eurocopter, a subsidiary of Airbus owner EADS, and Italy-based Agusta. "Those are large companies," she said. "This (MD Helicopters) is a smaller company that is needing to be extremely lean and competitive."
Last year MD delivered 15 helicopters, which consisted of eight Explorers, one MD 600N, three MD 530Fs and three MD 500Es. The layoffs came after a refinancing package for the company fell through, Davis said. "So now (MD officials) are in the process of working with a bank to bring in capital." Davis said "cash flow has been an issue" for the company, but she denied rumors the operation is in danger of folding.
The parent company in Holland has been "extremely supportive" of MD but has decided that MD should refinance with a major bank, she said.
"No one is talking about bankruptcy," she said, adding that "I haven't heard of any possibility of it (the refinancing) not happening." She said the company expects the new agreement to be completed within a few weeks.
Davis declined to comment on the unsuccessful deal, but speculation has centered on the Boeing Co. as possibly being interested in reacquiring MD. Boeing spokesman Hal Klopper declined to comment.