Brazil’s Embraer plane maker will cut its work force by about 20 percent because the global financial crisis has sharply reduced demand for its mid-sized passenger jets and executive jets, the company said on Thursday.
Empresa Brasileira de Aeronautica SA did not specify the precise number of posts that would be eliminated, but said the amount represents about 20 percent of its global work force of 21,362 people.
The company said its decision to cut costs and jobs was forced by a “the new reality of demand for commercial and executive aircraft,” a statement said.
R&D UNTOUCHED
Most of the job losses will hit Embraer’s production and administrative units, including a layer of management that the company did not describe in detail. But most engineering posts will be maintained to develop new products and technology, Embraer said.
The company is the world’s fourth-largest plane maker after US-based Boeing Co, Europe’s Airbus and Canada’s Bombardier Inc.
Most of its workers are employed in Brazil.
REVENUE GUIDANCE
Embraer also said it was revising downward its revenue guidance for this year to US$5.5 billion, corresponding to 242 deliveries of commercial and executive jets.
The Agencia Estado news service said Embraer’s previous delivery prediction for the year was 270 jets.
Embraer said it was particularly exposed to the economic problems because “over 90 percent of its revenues are generated abroad.”
“Therefore, the resiliency that the Brazilian domestic market has been demonstrating through the crisis does not significantly alter this adverse scenario,” it said.
While Brazil has been hit by the meltdown, its economy appears to be limping along with slow growth — in contrast to the recessions for Europe and the US.
WORLDWIDE OPERATIONS
Embraer’s main production facility and headquarters are in Brazil, but it also has operations and offices in China, France, Portugal, Singapore and the US.
An Embraer spokesman said the company would not immediately provide further details about the job cuts and the statement did not say whether jobs would be eliminated outside of Brazil. He spoke on condition of anonymity.
In the US, its main market, Embraer is headquartered in Fort Lauderdale, Florida. It has a maintenance center in Nashville, Tennessee, and executive jet service centers in Windsor Locks, Connecticut, Mesa, Arizona, and Fort Lauderdale.
The spokesman did not know how many people Embraer employs in the US.
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