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Sep. 10--Cessna Aircraft has taken some tough actions to adjust to a down market for business jets in the past several months.
It has cut its work force in half, furloughed employees and reduced production as customers canceled and delayed orders.
Now that the economy is stabilizing, the focus is on improving Textron's businesses, Lewis Campbell, head of Cessna's parent company, said on a webcast Wednesday.
Cessna must improve its margins and increase profitability, officials said.
The company is striving to lower the cost of fabrications, production and engineering and improve labor productivity, officials said.
To that end, it's seeking more opportunities for material price reductions from suppliers and evaluating sharing the costs with them on new product development.
It's also consolidating facilities.
Cessna is closing its Bend, Ore., facility and moving production of the Corvalis aircraft to Independence, Kan., and Chihuahua, Mexico.
In all, Cessna is consolidating 10 facilities -- with about 540,000 square feet of space -- to fit the lowered production demands.
The consolidation involves primarily leased space, said Cessna spokesman Bob Stangarone. He did not have further details.
At the same time, Cessna is working to upgrade and refresh its product line to be prepared when the market returns, said Textron president and chief operating officer Scott Donnelly.
One plane it may upgrade |is the Citation X, which one analyst Wednesday called "long in the tooth."
The focus is on its light to midsize jets, Donnelly said, including the Citation X.
There are a "number of things on the drawing board," he said.
There are signs the market is stabilizing, Donnelly said.
The once-record number of used jets on the market is declining and utilization is stabilizing, he said.
"We're seeing customers come in and buying" used aircraft, Donnelly said.
Cancellations and deferrals for jets to be delivered this year have dropped to small numbers, officials said, although there are still some cancellations for jets to be delivered in 2010 and 2011.
Just a year ago, Cessna was planning to build 500 jets this year.
Now, it remains on track to deliver about 275 jets during 2009, Donnelly said.
Deliveries are expected to fall slightly next year, before moving higher in 2011.
"We do still feel good about the long-term outlook of this business," Donnelly said. "We don't feel there's any real structural change."
Companies will still need aircraft to help their businesses, he said.
"We fully expect this to recover," Donnelly said.
Reach Molly McMillin at 316-269-6708 or [email protected].
