Courtesy of Mish.
A Mish reader who works at Honeywell informed me last week that a huge slowdown was coming in the aerospace/aircraft business.
I now have the internal memo from Tim Mahoney, Chief Executive Officer of Honeywell Aerospace, with comments from the reader who went through a similar layoff and forced furlough situation last November as well.
Obviously, things have not improved.
Honeywell Employee “HE” writes
Hi Mish,
Here’s a heads up for you regarding upcoming aerospace layoffs.
We got word a few days ago that Honeywell is planning a new “reduction in force”, which is the company’s PC term for layoffs. We received an e-mail indicating that the action is coming up in August, where employees have been solicited to voluntarily apply to participate.
This is a repeat of the situation that made the news last November in which Honeywell announced At Least 1,000 Phoenix Valley Workers to Lose Jobs following mandatory holiday furloughs.
In March, the Seattle Times reported Boeing Cuts Could Reach 10 Percent.
History is about to repeat. Layoffs for the entire industry are coming because business is in a huge slow down.
Best regards,
“HE”
Turbine Engine Orders Down 10-20%
In a followup Email “HE” writes …
We’re starting to see numbers for the coming jobs reduction. The pipeline for orders for turbine engines is down by 10-20% with job cuts going to be that range. About 40K people in Honeywell’s aero division. Because we have production backlog to keep revenue up, cuts are going to hit the aero division’s engineering and supply chain positions harder. Number of layoffs tough to predict because this portion of HON’s workforce is top-heavy by age with many folks near retirement who benefit from volunteering for the reduction.
The slowdown in order pipeline is not just from business jet makers. We also see a slowdown in commercial transport OEMs.
Internal Honeywell Memo
From: Tim Mahoney Message
Sent: Wednesday, July 13, 2016 10:38 AM
Subject: Message from the Aerospace Leadership TeamThis message was sent to Aero employees in the U.S., Puerto Rico and Canada*
MESSAGE FROM THE AEROSPACE LEADERSHIP TEAM
As witnessed with our recent cost-saving measures, Aerospace continues to experience the effects of a slowdown in certain business segments. The industry has experienced more than 30,000 job reductions in the last year along with ongoing earnings volatility. Customers continue to cut costs in their supply chain and reduce inventory in their factories, resulting in uneven short-term customer demand for our business.
To navigate this challenging environment, we must move faster, make quicker decisions, and be more effective and efficient. Improving our organizational speed by addressing our workforce and management structure, including the number of organizational levels and reporting scope, will help drive faster growth and better serve our customers.
Based on these factors, we are conducting a workforce reduction in Honeywell Aerospace for the United States, Canada and Puerto Rico. We fully understand the individual and collective burden and stress this decision creates so will move as quickly as possible through the process and inform affected employees as soon as details are finalized.
Individual employee selection requests will be considered following established consistent and equitable policies and procedures. Employees who wish to express interest in being selected for this reduction should do so confidentially by sending an email to their Human Resources contact by close of business on Friday, July 29, 2016.
Eligible employees selected through this process will be offered the same benefits as other employees impacted by these reductions, including severance and outplacement assistance. Honeywell reserves the right to accept or reject self-nomination requests based on business needs. The Honeywell reduction in force policy for non-represented U.S. employees is available online. For Canada and Puerto Rico, please see your HR representative.
We remain focused on driving sales to prevent the need for further cost actions. However, additional actions may be necessary should market conditions continue to deteriorate, including in other regions of the world, which would be determined on a country-by-country basis, following local laws and practices.
Please do your best to remain focused on serving our customers, improving operations and execution and increasing sales to help us accelerate growth and remain competitive in a difficult global economic environment.
The Aerospace Leadership Team
Airbus Lowers Delivery Expectations
