Cessna Averts a Strike, But 700 More Layoffs Coming

Union vote shows workers unhappy, but not willing to strike.

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Cessna Aircraft Company

Cessna told workers on Tuesday it is forced to further pare its workforce with 700 more layoffs across the board. This announcement came on the heels of a vote by Cessna's 2,500 union employees on Saturday not to strike. The no-strike vote meant the union accepted by default a new contract they had voted by 58 percent to reject. "The timing was unfortunate, but [the contract vote and the decision by Cessna parent Textron to cut more jobs] were not related," said Doug Oliver, Cessna Director of Corporate Communications. There was no timetable announced for the layoffs, which will cut Cessna's worldwide workforce from 8,500 to 7,800. It isn't yet known how many of the job losses will be at Cessna headquarters in Wichita, Kansas, nor what the breakdown will be between hourly workers and salaried management personnel. Cessna currently employs a total of 6,200 in Wichita, down from 12,500 in late 2008 when the company had 16,500 employees worldwide. In a memo to "Cessnans," company President, Chairman and CEO Jack Pelton wrote, "…the recovery and growth we expected to see throughout the year have not materialized, and the timing of any recovery remains uncertain. This requires additional adjustment to our production schedules, and more than ever, cost is critical to our competitive position. We must continue to lower our cost structure to remain competitive." When delivered to employees, the pink slips will come with 60-days' notice and will include a severance package.

In response to a new contract offer from management, on Saturday, just under half of the 2,500 machinists' union workers voted to strike, though 58 percent rejected the proposed new contract. It would have taken a two-thirds vote to go ahead with a strike, so the contract was accepted by members by default. Workers' dissatisfaction with the contract center on issues of job security and increased employee contributions for health insurance. Many employees expressed concern over jobs moving to Mexico. Pelton said in a statement, "We presented the members a contract that was more than fair, given our business environment. And while we are disappointed they rejected the offer, we appreciate the membership's willingness to continue to put the customer first, knowing that will lead to success for all." Following the vote on Saturday, which countered the union's strike recommendation, Machinists District 70 representative Steve Rooney told the Wichita Eagle, "We support the membership entirely. We understand the times we're in today. A paycheck is a hard thing to give up." Key components of the seven-year contract include: a $2,500 bonus paid in Jan. 2011; lump sum payment of $1,000 in Jan, 2012; performance-based bonuses ranging from 0 to 4 percent of pay after the first year of the contract; no raises for the first four years, but 1 percent increases in years five through seven (and a clause for review of wages beginning 2014); annual cost of living increases for all seven years of the contract; transition to the same consumer-based medical, dental and vision plans available for non-union employees; an increase in pension payments of $57 per year of service.