LATROBE Valley’s flagship manufacturing operation GippsAero is moving to shed about 40 workers about 27 per cent of its workforce in a restructure which has taken government stakeholders by surprise.
The planned redundancies have come after recording poor international sales for its bestselling product, the GA8 Airvan, as a result of the high Australian dollar.
It is also understood GippsAero’s parent company, Indian-based Mahindra Aerospace Company, has put its search for a production location for the GA18 aircraft, which has been touted to double the workforce, on hold.
In an official announcement Wednesday afternoon, the company stated it would seek the majority of redundancies voluntarily after a “strict” process of skill requirement assessments, and creating a new focus on the “right sizing production capacity”.
“The restructuring plan will involve cost reductions through the consolidation of working groups and will create a stronger unified organisation,” the release stated.
“Mahindra’s support for GippsAero continues undiminished with substantial ongoing investments in organisational improvements, hiring a talented front line, building momentum to realise the full potential of (its range of aircrafts).”
Despite numerous requests for more information, GippsAero was unavailable for further comment.
While rumours began circulating earlier this week redundancies would be sought at the operation, it is believed the news was formally delivered to staff at a closed meeting on Tuesday afternoon.
As a chief tenant of Latrobe Regional Airport, GippsAero has helped bolster the injection of millions of dollars in investment from local, state and federal governments into the airport’s expansion.
Having manufactured more than 200 aircraft for the national and international markets, GippsAero currently employs about 150 workers, and has been hailed by all levels of government as a shining example of what businesses the Valley could attract under a future diversified economy.
Latrobe City Council chief executive Paul Buckley said he had been notified of the company’s plans in the 48 hours before the restructure announcement, adding he believed the troubles faced by the company would be “temporary”.
“You can understand their challenges when it is currently so hard for international customers to access finance against the Australian dollar,” Mr Buckley said.
“But because it’s a specialist niche business, you can’t apply the same assumptions we might apply to the vehicle manufacturing industry, where there is a strong competition from imports; GippsAero operates in a much different environment, and that will be an advantage for them when they recover.”
Mr Buckley said the restructure would not affect Latrobe City’s ongoing $6.2 million expansion for Latrobe airport, which he said was operating with a “healthy” range of tenants.
He said he understood GippsAero was planning on renewing its leasehold on the airport’s facilities in three to four years time.
State Member for Morwell Russell Northe said the announcement was “extremely disappointing”, adding it was concerning a company of GippsAero’s profile was shedding such a magnitude of jobs.
“We are however confident they will continue to have a strong presence in our region; there is no reason why they can’t bounce back – they’ve done it before – they have potential to come back strongly,” Mr Northe said.
State Development Minister Peter Ryan said the Coalition Government would move swiftly to assist employees affected by reduced demand for the company’s GA 8 Airvan.
“GippsAero has advised that all redundant employees will receive their full entitlements. They ill also be offered outplacement services, counselling, and relocation conditions for some employees to other company operated facilities,” Mr Ryan said.