Engineering group Meggitt is reducing its workforce by 15 per cent in response to a global downturn in the aerospace sector
The company has told the Stock Exchange the move, which would result in the loss of 1,800 jobs from its 12,000 strong global workforce, would ‘mitigate the reduction in demand.’
The aircraft component manufacturer said it would decrease its 12,000-strong workforce by 15 per cent in response to a slump in civil aerospace demand. In its Q1 trading statement, the company stated that it had already taken action to reduce variable costs including accessing furlough schemes where available and reducing temporary labour.
Action reflects civil aerospace demand reduction
The statement added: “While we recognise the need to retain flexibility as demand patterns develop over the coming months, we have taken the difficult decision to reduce the size of our global workforce by around 15 per cent, subject to ongoing consultation in the regions in which we operate. This action will ensure that our internal capacity across our civil aerospace business reflects the reduction in demand and positions us appropriately as we enter 2021.”
The company has implemented other measures to reduce its operating cost base in 2020. These include a freeze on all new hiring; removal of annual salary increases for employees; material cuts in operating costs; and, for the second half, reducing fees for non-executive directors and CEO, CFO and Executive Committee salaries by 20 per cent.
Group reduces cash expenditure levels
Meggitt is also taking a number of cash specific actions including significant reductions in capital expenditure and inventory in addition to the cancellation of the group’s final dividend payment for 2019, which was announced last month. Implementation of the measures throughout the year is set to reduce cash expenditure levels by around £400m to £450m in 2020.
Meggitt employs up to 1,000 people at its base on Ansty Park in Coventry which opened last year following the relocation of its global headquarters from Bournemouth Airport. The company also has offices in Tyseley and Erdington in Birmingham and Leicestershire alongside other UK bases.
Details of the locations where roles will be lost have not been announced. Meggitt employs 2,500 people in the UK and around 6,500 in the US, with other global operations in countries including China, German, France and Brazil.