Outsourcing Also An Option
Cessna
Aircraft is making preparations to both lower production and cut
1,200 jobs. But those aren't the only options being considered in
Wichita (KS). The airplane maker also looking at whether to reduce
some employee benefits. The Textron subsidiary is reviewing whether
to outsource "some activities," Textron chief financial officer Ted
French told the Wall Street Journal in Friday's edition. "Cessna
has made some progress there, but there's more to be done."
Reduced Earnings Estimate
The conference call between executives of Textron Inc., Cessna's
parent, and Wall Street analysts came after Textron reduced its
earnings estimate.
On Thursday, Textron lowered its earnings outlook
for this year as it faces economic uncertainty and the cancellation
ofa significant number of business-jet orders. Cessna will also
stop production for seven weeks in June and July and furlough
roughly 6,000 workers. The company is acting to offset the effect
on earnings, said Lewis Campbell, Textron chairman, president and
chief executive.
Full-year earnings per share now are expected to be between
$2.40 and $2.60, compared with an earlier estimate of $3.05. Cessna
plans to deliver between 180 and 195 jets this year, instead of an
earlier expectation of 220.
Nothing Firm Yet
No decisions have been made about any reduction in benefits at
Cessna, officials said.The company is in an "analysis phase," said
Textron spokeswoman Susan Bishop. "As these get decided on,
certainly they will be communicated to employees."
Cessna has cut some of the costs associated with the way
benefits are delivered to employees, said Cessna spokeswoman
Marilyn Richwine. For example, workers can go online to view
information on their pension plans. At the first of the year,
Cessna changed the health care plans of nonunion represented
employees. Richwine said she did not know of any future benefit
changes.
What Will The Union Do?
Without a vote by Machinists union members, no
changes can be made to benefits in the labor agreement. That
agreement expires in September 2004. Richwine also said that Cessna
is looking at outsourcing activities not related to building
airframes.
When it comes to parts production and building airframes "we're,
at this point at least, not going down that path as a definite
direction," Richwine said. "We're still looking at what's the best
thing for our customers, (and) how we can build the best possible
product for the best cost and quality that we possibly can."
However, one of Textron's initiatives is to do more global
outsourcing, Bishop said. That may mean a change in some suppliers,
she said.