Embraer to Lay Off 20 percent of Workforce

 - February 19, 2009, 11:15 AM

Embraer will remove an entire layer of if its management structure as part of a plan to lay off 20 percent of its 21,362-strong workforce, the company announced today. In a prepared statement, the company said it would concentrate the cuts in production and administration areas, while it keeps the “significant majority” of the engineering workforce to continue new product development and technology.

The company issued revenue guidance for the year of $5.5 billion, which corresponds with delivery of 242 commercial and business aircraft, compared with its earlier estimate of 270. It also lowered its projections for this year’s R&D investment, from $450 million to $350 million.    

Asked for comment on the timing and exact locations of the layoffs, an Embraer spokesman said he was bound by strict instructions to reiterate only what the company released in its communiqué today, which attributed the decision to “the unprecedented crisis affecting the global economy.” However, another spokesperson said that the layoffs would begin immediately and affect every part of the business, except for OGMA in Portugal and the Harbin-Embraer joint venture in China.

Embraer emphasized the fact that, although it maintains its headquarters in Brazil, it generates more than 90 percent of its revenues from abroad. “Therefore, the resiliency that the Brazilian domestic market has been demonstrating through the crisis does not significantly alter this adverse scenario.”

Embraer executive vice president for the airline market Mauro Kern told AIN in January that he expected E-Jet production to drop by as much as 20 percent this year, but that a ramp-up of Phenom business jets would compensate for that decline. Meanwhile, he said, “We’re working hard to minimize the effect of this crisis on our manpower,” in response to a direct question about the likelihood of layoffs. “We see nothing significant at this point,” he said at the time.