Aviation Industry Layoffs Management

By Author: Anthony W Bills
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Aviation Industry Layoffs management
Introduction
Layoffs are a temporary redundancy or termination of employees in a company or in an industry. This is done with some reasons and some positions in the company are regarded as unnecessary as the company would do without due to some economical reasons. Originally, the tern lay off referred to some temporary interruption of work but currently the term is used to refer even the permanent elimination of a position in a company. Downsizing is the most appropriate name that can be used to refer to a permanent reduction of a position in order to improve efficiency and effectiveness in a company. In most cases, the management uses the name downsizing to refer to termination of employment to some employees in order to increase the organizational performance and reduce the costs of doing business.
Layoffs have been common in most parts of the world. Some industries have been hit hard by the economic downturn or recession. Among the industries that have experienced this are automotive, manufacturing, financial services, construction, mortgage and aviation. Some companies ...
... have been hitting the news headlines when the lay off a number of employees. When one industry is affected, the immediate overlapping industry in affected, for example, when an automobile makers are affected, the tire and parts manufactures are affected as well.
The aviation industry has not been left behind in the layoffs. The industry has been struggling due to hiking of fuel prices. The aviation manufacturing companies and airlines have had the effects of the economic down turn and most of them have considered layoffs as the most appropriate way of keeping the company running with reducing the costs. Among the airlines that have announced their layoffs include, the Delta, United Airlines, Continental Airlines, Air Canada, US airways among others (Wilkinson, 2004).
Aviation Layoffs
The GE aviation is one of the aviation companies that have been affected by the layoffs. The company is in a verge of layoff 1000 employees. The market demand of the company products have been the main reason for the layoffs due to financial difficulties the company had been going through with increase of production cost.
The GE Aviation gave a primary reason for the layoff as the decrease of the demand of its products in the market and the need to acquire the Smith Group Plc’s aerospace unit in to the GE aviation. The need for money to make all these plans work was the major reason the company decided to layoff.
The group that has been affected by the GE aviation layoff is the managers and salaried agency staff. The company was to layoff of 300 managers and 150 salaried staff. This will help the company to cut is expenditure significantly. The company has about 4000 workers and layoff of 1000 employees will help the company cut its expenditure by a quarter. Though the company had a record production of 2,150 aviation engines in 2008, the company has face delay with the delay in the production of Boeing 787 Dreamliner, the company employees based in Ohio are the most affected by this layoffs (Baumol et al, 2003).
The giant aircraft manufacture Boeing has not been left behind in the layoff. The Boeing layoff is quite unique, this is because the company is still hiring more employees especially those with specialized skills. The layoffs are mostly aimed at the administrative and contract workers. The company announced the drop of 4,500 jobs in 2008 in the Boeing Commercial Airplanes (BCA) section. This will affect the three engine makers the company has contracted and other equipment suppliers. Among the companies that contribute to the welfare of Boeing including Diamond Aviation, Hawker Beechcraft, Cessna among others who have already dropped 3,430 jobs. The demand for aircrafts and aircraft parts have declined considerable, the companies dealing with navigational and search equipment have experienced a drop in demand by 14% by 2007 (Elizabeth, 2010).
Cessna company also announced its plan to layoff some of its employees. The company announced this due to decreased sales and wanted to save costs of doing businesses. The company layoff plan was to layoff 4600 employees. The company had announced to layoff 2,600 though it was forced by the economic situation to increase the number of layoffs with 2,000.
The company planed to close the Citation Service Center in Toledo and all employees working in that center were laid off. The company had planed to do all its layoffs on March 2009 and it actually proceeded as planed. The company’s main reason for layoff was because of the reduced sales and wanted to avoid incurring more costs. The company had also to reduce manufacturing jobs as the purchase of the aircrafts had already reduced (Elizabeth, 2010).
Causes of layoffs
With merging and acquisition in different companies, employee layoff had been apparent. In merging, most of the employees loose their jobs due to interest of the acquiring company. For example, merging of Northwest Airlines (nwa) with Delta caused a significant layoff of employees. After they merged, the Northwest airline brand was discontinued and they agreed to use Delta. Most of the nwa employees faced layoff compared to the Delta employees.
Financial crunch is another major cause of the layoffs. In 2007, financial crisis was triggered by liquidity shortfall in the US banking sector. The sector was over valuated of its asset. This caused to the collapse of large financial institution that were acting as backbones of different aviation companies and also resulted to the fall of different companies shares in the stock market. Since this affected every one, most people’s jobs were terminated and they were forced to work within their strict budget. On the other hand, most people reduced spending on holidays and in turn airlines suffered in turn. This also contributed to the layoffs in the aviation sector (Sahdev, 2003).
Critics and consequences of layoffs in aviation
Though layoffs are often done to cut the costs of business operations, they are often short term fixes and are often detrimental to the company. There are other alternatives companies can opt rather than layoffs and they could have a better solution. The probable reasons a company can opt to layoff is when there are less sales, competitions is high and the competitors acquire a considerable market share or the suppliers increase their prices. Each and every company has to achieve their forecasted projections, public companies must face Wall Street too and this gives a reason to fix anything that would make the company divert from the projected goals. Investors do invest in companies that achieve their targets and this also has to bring along a quick action to fix the problem (Mellahi & Wilkinson, 2004).
The actions that must be taken in most cases work against their interests. The first action the executives do is to cut cost rather than increasing income. Reducing workforce has been the most and often preferred action companies opt for scoring the Wall Street objectives. This is not an appropriate action because the workforce will be required to increase the company production and therefore will on the other hand be able to have enough stock to penetrate different markets.
Downsizing of an organization in a name of layoffs does not reduce the costs as desired and in most cases it increases. Layoffs go hand in hand with golden handshake and retirement benefits as well as service commissions. The company will incur more costs that it could have incurred when paying the layoff employees in some months or years and still their contribution to the company is terminated. The layoff costs outweigh the aspired or targeted savings.
According to John Dorfman, a money manager based in Boston did an intensive analysis on the post layoff performance of different companies including airlines and manufacturing companies. In his reviews, he analyzed companies from 11 to 34 months doing a thorough research on how they perform after the layoff. In his article Jobs Cuts often fail to Bolster Stocks he said the companies that had an achievement had only 0.4% increase in their revenues. The shareholders and the company will be the losers after the layoffs because by losing talented employees they will be left with incomplete or useless product to offer to the customer (Mellahi & Wilkinson, 2004).
Most companies fail to realize that they have a tremendous long-term capital investment in their employees. Companies term wages and benefits of employees as expenses, and that’s the reason why layoffs are quite often with a reason of trying to cut the costs of doing business. On the other hand, these companies should term this as compensating employees’ talents and dedications. Without employees, no company can prosper, without pilots, a plan cannot fly and without an engineer, there is no safety in the aircraft. All employees in any company play different roles and layoff is crippling the company’s capabilities. The trust the employees may have on the management is completely killed especially on lay off and even if an employee is recalled back after some time, he may never trust or dedicate fully to the company.
Layoff or downsizing is the words that are used to refer to elimination of some employees in the company. The company mostly looks on the reduction of expenses regardless of whether the company will be able to compete in the market or fulfill the demands of the investors and shareholders as well. The production and the survival of the company depend on those left. It will merely depend on how they are feeling about those who faced layoff and what they are feeling about themselves and what they might face thereafter if the expected goal is not achieved. The company may decide to layoff employees it considers being low producers, but on the other hand it can affect others through creation of uncertainty which may cause others to leave. Those who mostly leave the company are high producers with great talents because they are not certain that the company is the best and they can always get another job with another company which they consider better. The after layoff climate always affect the company because it affects the quality of employees and quantity as well.
Companies should not only concentrate on layoffs with a reason of reducing the cost. They should also consider less obvious effects that may have an impact to the company at long run. They need to consider the reduction of moral and innovation as well as performance. The company’s workforce which is vital to its welfare is also affected considerably (Mellahi & Wilkinson, 2004).
Alternatives to layoff
There are several alternatives that can replace the layoffs and reduce the costs. The most and effective method is restructuring. Job redesigning and restructuring is the most appropriate way to handle the company especially when there is a dire need for cutting operations costs. This can be done through closing of obsolete operations and branches and also selling non-core operations as well as internal processes.
Layoffs incur a one charge to the company and this may ruin the efforts of the company in trying to recover the money dispersed. In restructuring, the company will have moderate changes as it may shift some employees from high paying sectors to lower paying sectors and this will not affect the product but the cost of doing business will be reduced significantly. Fixing the problem will be far better than cutting jobs just to good to the investors. Cutting jobs is terminating the reason why the company has been successful in the first place (Tyler & Wilkinson, 2007).
Managing layoffs
In order to have the best layoff process and have no problem with the employees, there must be a procedure to handle the layoff process including:
• The first thing is to communicate with the employees concerning the business situation. This will help the employees have the psychological preparation that anything can happen and they will have figured out what would be their next step. The concerned person must be very open to the employees on what the company is expecting or planning to handle the situation. There must be a notification of the expected procedure that could take place. The employees will be prepared for the worst. Employees should be separated and those who are to face layoff should be made close to each other and those are to be left should be kept together to avoid after layoff effects. Communicating the left employees and assuring them they are not to face layoff because they may be affected by what their fellow have gone through and they might be afraid they will be the next to face the same fate.
• To avoid bad reputation of the company, the employees who have faced lay off should be compensated appropriately and in time to avoid their often coming back the company to collect their compensation as this may affect employees who have been left thinking they might face the same problem with the company in future (Cascio, 2002).
Conclusion
Layoffs have caused many companies more than they would have expected. One time charge cripplers the company and may bring the company to a halt which may be hard to recover or might take time. There are alternatives that can compensate layoffs and could help more than layoffs. In the aviation industry, external effects contribute to layoff more than internal factors than my include competition, sales decline than can be dictated by the financial status of the buyer.
When layoff is expected, the company must have adequate and effective procedure that will help in avoiding the effects to the remaining employees or jeopardize the trust the employees may have to the management.

Reference:
Baumol, W., Blinder, A. & Wolff, E. (2003). Downsizing in America: Reality, Causes and Consequences. New York: Russell Sage Foundation
Cameron, K. (1994) Strategies for successful organizational downsizing. Human Resource Management, 33: 477-500.
Cascio, F. (2002) ‘Strategies for responsible restructuring’, Academy of Management Executive, Vol.16, pp. 80–91.
Elizabeth, B. (2010), UPS pilot layoffs will include some in Anchorage
http://www.adn.com/2010/03/23/1196418/ups-pilot-layoffs-will-include.html#ixzz0sisllBHd
Mellahi, K. & Wilkinson, A. (2004) Downsizing and Innovation Output: A Review of Literature and Research Propositions, BAM Paper 2004, British Academy of Management.
Sahdev, K. (2003) ‘Survivors’ reactions to downsizing: the importance Human Resource Management Journal, Vol.13, No.4, pp. 56–74.
Tyler, M. & Wilkinson, A. (2007) The Tyranny of Corporate Slenderness: Understanding Organizations Anorexically, Work, Employment and Society, 21: 537-549.
Wilkinson, A. (2004) ‘Downsizing, rightsizing and dumbsizing: quality, human resources and sustainability’ Total Quality Management Vol 15 no 8 http://www98.griffith.edu.au/dspace/bitstream/10072/16844/1/34201_1.pdf

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