Thu, Nov 12, 2009
Wouters Notes Significant Progress Over The Past Year, But
Clouds Remain
In a memo released to all Cirrus
employees Monday, CEO Brent Wouters said he is optimistic heading
into 2010, and that the company is "planning conservatively for a
modest recovery toward greater delivery volume and even greater
market share." But, he cautioned that the recovery would still be
slow, and that patience would be needed.
"You are aware that Cirrus made a purposeful decision to retain
higher-than-demand staffing levels in manufacturing and
manufacturing overhead to deliver on pending institutional orders,"
Wouters wrote. "Although we continue to pursue these
opportunities and feel very confident about favorable outcomes, we
need to structure our manufacturing operations for the desired
costs at today’s actual demand. Expense levels in other
areas also need to be refined further to achieve desired expense
levels, but these changes will primarily focus on non-payroll
expenses."
Wouters cited a number of factors for his optimism in the memo.
Among them are that fixed costs have dropped 50%, inventory levels
are down 58%, and liabilities have dropped 15%. But just as
important, earnings improved 65% over March of this year on the
same number of airplanes delivered. "All these measures illustrate
that our business continues to strengthen as we emphasize the
customer and product innovation," he said."
Wouters declared that the business climate has stabilized, and
has even begun to improve, saying "(L)et’s leave behind the
challenges of 2009 and move forward into 2010 with a growing sense
of optimism."
Brent Wouters
But as a contrast, local Duluth television reports that Cirrus
sent out more than 50 furlough notices to employees this week, most
of them in the manufacturing area, and there was a report of a
dispute over rent owed to the City of Duluth in the amount of
$250,000. Wouters told Northland News Center that the furloughs
were in anticipation of the 1st quarter of the new year, which is
traditionally a slow time for airplane sales, and that he hoped to
be able to recall those workers in the future. He also appeared
live on the station to say Cirrus "made an arrangement with the
city in advance to hold back payments" on the hangar it leases from
the city. He said the city has been very cooperative in Cirrus'
plans to spend the money for rent on the hangar, which Cirrus has
since vacated, on employees and maintaining staffing levels in the
company. "We haven't failed to make the payments," Wouters told the
station. "And our intention is to make that payment as soon as we
have available cash to do so, and we are entering that period
now."
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