Bell CEO cuts staff, moves production to save money

 - October 9, 2007, 4:18 AM

Proving perhaps that nothing sweeps cleaner than a new broom, Bell Helicopter CEO Mike Redenbaugh, in the job since late May, has announced plans to move Bell’s military helicopter manufacturing out of its historic Fort Worth, Texas facility and into a new site in Amarillo, Texas. The Amarillo site will also handle final assembly for the V-22 Osprey tiltrotor, according to a recent message from Redenbaugh. Fort Worth will remain Bell’s headquarters and the site of engineering and parts manufacturing. Bell employs about 4,900 at its Fort Worth-area facilities, down from about 6,500 five years ago.

The decision to assemble the military helicopters, nearly all of which are destined for the U.S. Marines, in Amarillo means that Bell, over the last 15 years, will have moved final assembly of all aircraft out of the Fort Worth plant that once turned out hundreds, sometimes thousands, of commercial and military helicopters each year, producing them night and day during the Vietnam era. Bell shifted production of its civil light and medium helo line to Mirabel, Quebec, in the mid-1980s, in return for substantial financial credits and guarantees from an industry-hungry Canadian government.

Despite the workshare shift, “There is no plan to close Fort Worth,” Redenbaugh said in an in-house message to employees. “This will continue to be a manufacturing and business center as far into the future as we can project.”

Redenbaugh was named Bell CEO with the avowed mission of cutting costs and getting the formerly dominant rotorcraft giant back on its fiscal feet. Working against Redenbaugh is the fact that Bell faces serious problems with its major military projects. The Marines, Bell’s largest customer, recently told Redenbaugh that the V-22’s present projected cost is 36-percent higher than the desired target. Even worse, roughly the same is true with Bell’s other major military program, the so-called H-1, a plan aimed at saving the military many millions by retrofitting both Bell Cobra gunships and UH-1 Huey transports with common engines and rotor dynamics for what was once hoped to be a significant cost saving. According to the Marines, there is concern that the H-1 program could cost roughly 30 percent more than the target figure.

To make matters worse, Redenbaugh’s recent layoff of some 120 administrative and clerical workers, many of them Bell high-timers with just a few weeks before retirement, has drawn heat on the company from local press and union groups. The layoffs saved Bell the costs of a higher pension rate these workers would have been entitled to had they served out their full terms. Bell denied that pension-savings factored in to its thinking, saying that the cuts were based entirely on seniority and conditions laid out in Bell’s contract with United Auto Workers Local 317.