Pacific Aerospace to lay off workers

Hamilton-based aircraft manufacturer Pacific Aerospace Corporation is to lay off up to 45 staff because an American buyer has reneged on a deal to buy 12 planes worth $24 million.

Managing director and majority owner Brian Hare confirmed he was talking to Engineering, Printing and Manufacturing Union officials and staff today to finalise numbers and names.

The options included staff layoffs in production and sales, positions made redundant -- including some changes to senior management -- and an injection of capital from shareholders.

Former chief executive Paul Hebberd has already left the company and Mr Hare will take over as acting CEO.

The contract with the unnamed buyer of Pacific Aerospace's flagship plane, the PAC 750XL, was announced in January and was described at the time as a "sales breakthrough".

The buyer did not front up with a deposit and defaulted on the order.

"We've been trying to back fill since then and it's not been successful to date," said Mr Hare.

"We now have to cut our cloth to fit. Unfortunately this is resulting in some positions being made redundant. That's the hardest part.

"Our success and staff have been hard won and it's hard losing them."

Pacific Aerospace has also dumped its American sales agent and now sells the planes in the lucrative US market itself.

Mr Hare said there was no suggestion Pacific Aerospace, based at Hamilton Airport, would have to close down because of the cancelled order.

"In fact, in this long-term process we're going through, we went to the shareholders and we've had great support from them."

The company employs 200 people. About 50 of them were recruited from overseas.

Speculation about Pacific Aerospace's financial situation has been rife since July, when a Hamilton daily newspaper was contacted by some creditors after New Zealand Trade and Enterprise announced the company would get a $480,000 grant from the Government's growth services fund.

Mr Hare said the grant was not used to prop up the company's finances but paid for the aircraft's certification overseas.

He said he had spoken to the company's creditors and put in place payment options.

"The company will be very strong as a result of these decisions," he said.

Twenty five Pac 750XL planes have been sold and 22 are being built. Lost orders would be made up over the next year.

Pacific Aerospace raised $5 million last year by selling new shares to investors, including the venture capitalist Endeavour Capital.

Mr Hare retained about 70 per cent of the company.

It was seen as a likely candidate for the NZAX market, for small and alternative structure businesses.

- nzpa