Piper Aircraft completes announced layoffs

Piper Aircraft Inc. completed its series of layoffs Friday in connection with the suspension of its light business jet program in October.

The number of jobs actually lost will be less than originally announced by about 30 positions. When the company announced the suspension of its program, it released 55 contract employees and anticipated reducing its regular workforce of about 850 to about 700.

Piper President and Chief Executive Officer Simon Caldecott said the actual layoffs of regular employees was closer to about 120 and he hopes to be able to maintain employment at its current level of between 730 and 740 workers.

Caldecott also said its owners have agreed to provide between $5 million and $10 million for the company to make capital improvements and upgrades to its core products. The Brunei Darusssalam Ministry of Finance retains ownership of the company, although now through the Brunei Investment Agency rather than through Imprimis Strategic Investment Corp., which the country originally used to invest in Piper in 2009.

The state is also close to having an amendment to the incentive package it entered into with the company and county in 2008.

"It's our goal to have an executed amendment by the end of the year," said James Miller, a spokesman with the Florida Department of Economic Opportunity.

The company may have to pay back part of the nearly $10.7 million it received in 2008 because its employment numbers at the end of the year will be below requirements in its agreements with the state and the county to avoid sanctions.

The company could have to pay back as much as one-seventh of the amount it received every year it doesn't reach certain benchmarks regarding employment, wages and capital investments. Piper officials said they have reached necessary benchmarks for wages and capital investment, but will not hit the employment benchmark.

By not having 948 employees, or 80 percent of 1,185 workers, by the end of this year, Piper may have to pay back more than $1.5 million ($571,000 to the county and about $950,000 to the state) plus interest. The penalty would be less depending on how close the company got to 1,185 workers. The company's employment level by the end of this year, however, is expected to be in the range of 730 employees.

The company's employment, which fell below 600 in the summer of 2009 after the economy plunged, is not expected in the foreseeable future to reach its past levels of 1,100 to 1,200, according to Caldecott.

Piper officials are seeking forgiveness of the sanctions and a termination of the incentive package. Some county officials oppose forgiveness, although County Administrator Joe Baird said he would recommend an extension in the contract conditions — allowing Piper more time to reach the necessary employment benchmarks.

Orchid Mayor Richard Dunlop has been vocal in saying the company should be held to the agreement. He said the county could potentially use some of the returned money for projects such as an artificial reef to protect beaches. He noted the Sultan of Brunei is extremely wealthy.

Caldecott, however, said the company, while under the ownership of the Ministry of Finance, is seen as a standalone entity that should support itself and provide a return on investment.

He said if Piper does have to pay back the money, it will have to come out of the money that has been authorized for capital improvements and product development by the company's owners, ultimately affecting employment.

Caldecott said he would not like to see any lengthy extension and wants to try to resolve the contract quickly. He said the issue has created a "black cloud" over the company's employees. One employee, he said, has said he no longer wears his Piper attire in the community because of negative reactions.

He said the incentive package has accomplished its goal of keeping the company in Vero Beach and the company is not interested in seeking additional funds it might be entitled to under the agreement if employment were to rise dramatically. If Piper had been able to met all its benchmarks, it could have received as much as $32 million — $20 million from the state and $12 million from the county — under the agreement.

In a "white paper" produced by the company, it said it "has already, by far, exceeded total expenditures for product development and capital improvements originally contemplated by the incentive agreements. Directly spending nearly $100 million in additional long-term investments in the community. Piper has made more than $18 milion in capital expenditures and spent more than $79 million in total product development for all its product lines since 2007. Piper's investment in the community, through product development costs and capital expenditures, has directly returned more than $9 for every $1 invested by the state and local governments in economic development incentives."

The company also said it has averaged $40 million in payroll annually over the last four years, not counting about 20 percent more in benefits.

"It is a value to the community and a lot of people don't understand that," said Caldecott.

Source: TC Palm