French aviation giant Dassault Falcon announced Friday (May 19) “a less than 6%” reduction in the company’s global workforce, which includes some 1,800 workers at the French jetmaker’s completion facility at the Bill and Hillary Clinton International Airport in Little Rock.
Dassault officials said the company-wide workforce reduction involves a previously implemented downsizing at the Little Rock facility earlier this year, which included an “early-out program,” a reduction in the number of contractors, and an offload management that has returned previously subcontracted manufacturing positions.
“The current business aviation market conditions remain challenging throughout our entire industry,” said Dassault Falcon Jet President John Rosanvallon. “This is caused by worldwide economic and political uncertainty combined with a prolonged imbalance between supply and demand for new aircraft as well as a large inventory of pre-owned aircraft competing with new sales.”
Falcon Jet is the aviation subsidiary of the Dassault Group, the Paris-based French multinational conglomerate with more than 18,000 employees worldwide. Falcon Jet officials, which have not responded to several Talk Business & Politics inquiries since early January, did not say specifically how the global layoffs will impact the highly-anticipated roll-out of the long-range luxury jet, the Falcon 8X.
According to Aviation Week, the 8X has a price tag of nearly $60 million and has been touted as a game-changer in the luxury aviation industry because of its long range capabilities to fly up to 12,000 kilometers nonstop, or about the distance from Los Angeles to London.
Last summer, federal aviation regulators in the U.S. and Europe certified the 8X long-range jet for service following the company flight test program designed to demonstrate the aircraft capabilities under different conditions of operation with a particular focus on cabin comfort and connectivity.
This is not the first time the French jetmaker has announced substantial layoffs in Little Rock over the past decade. In 2009, the company laid off more than 100 workers in the midst of the Great Recession, blaming the sensitive and cyclical nature of the aviation industry. That layoff followed a $20 million, 116,000 square foot upgrade in 2008 that added four new state-of-the-art paint bays, along with new production, design and warehouse space, to accommodate the popular Falcon 7X.
In the post-recession years before the company’s most recent expansion in late 2015, Falcon Jet’s total job count in Central Arkansas fell well below peak employment levels in the early 2000s when the French jetmaker’s payroll topped 2,500, according to past news articles.
However, Dassault Aviation Chairman and CEO Eric Trappier revealed at the company’s 8X christening ceremony in November 2015 that there were more than 1,850 workers at the Little Rock airport facility. The centerpiece of the that $60 million upgrade included a 250,000 square foot hangar.
According to information from the state Economic Development Department’s annual reports made to the legislature over the past eight years, Falcon Jet has received more than $7 million in direct economic incentives under the Beebe and Hutchinson administrations.
Under former Gov. Mike Beebe, the French jetmaker received more than $5 million in cash and tax breaks for job recruitment, building construction and renovation, and other needs. In the same period, the city of Little Rock provided more than $400,000 for infrastructure and road construction, legislative reports show.
Following Dassault’s more recent multimillion dollar expansion, state economic development officials under Gov. Asa Hutchinson cut Falcon Jet a check for $1.5 million in cash from the Governor’s Quick Action Closing fund, which is used to recruit and retain state jobs. According to the state’s incentive pact with the company, Falcon Jet can receive additional tax rebates worth millions more if it reaches performance-based targets for total jobs and payroll thresholds.
AEDC spokesman Scott Hardin told Talk Business & Politics that so-called clawback provisions could apply to Falcon Jet if the company’s total jobs and payroll numbers don’t meet the criteria in the state’s incentive agreement with the French company. For example, under the state’s Create Rebate program, no payments will be made to Falcon Jet until the company meets certain payroll targets at the of the fiscal year.
“No clawbacks apply to Create Rebate as the jobs and payroll goals have been met,” Hardin said. “Regarding the cash grants, AEDC audits companies that receive these funds once annually to determine if job and payroll thresholds were met. If not, clawbacks are then applied based on how far the company was from the target in our agreement.”
Hardin said AEDC officials will contact Dassault executives over the next few weeks to learn more about how the ongoing global reductions could impact the Little Rock facility.
“Dassault is among the largest employers in the state and we certainly want to work with the company to ensure they remain and hopefully grow here for years to come,” he said.
According to the AEDC’s 2015 annual report, Arkansas’ clawback provision have only recouped $5.9 million of the $156.2 million allotted to the Quick Action fund since 2007. The lion’s share of those refunds for poor performance came from HP and First Orion in Conway, Nice-Pak of Jonesboro and Caterpillar in North Little Rock, which laid off more than 100 workers last year.