The creation of Bombardier's two new jets has forced the company to slash jobs Reuters reported Tuesday.
The airplane manufacturer is cutting 1,100 jobs in Canada, and 600 in the United States in order to make headway with its CSeries commercial and Learjet 85 aircraft's Reuters reported. The majority of the Canada portion is expected from Montreal Reuters reported. The changes will affect permanent, and contract employees, and union and non-union members Reuters reported.
"The cuts come as an absolute surprise, we were shocked in fact, cause things are going pretty good at the workplace," Roland Kiehne, president of the Unifor local in charge of 2,000 unionized workers at Bombardier's plant in Toronto Reuters reported.
Three hundred people were previously let go in December Reuters reported The company is expected to suffice the jobs lost with ones it is hiring for Reuters reported.
"It's hard to believe that they'd be laying off this level of people without the financial necessity of doing it," Richard Aboulafia, vice president of aviation consultancy Teal Group told Reuters. "In other words, this speaks to a real issue in terms of raising more money to complete the (CSeries) program."
"You can look good to people who provide you with cash by bringing in orders. And if you can't do that, you desperately cut costs," Aboulafia told Reuters. "That's not a happy picture," Aboulafia told Reuters.
The company hopes to bring in $125 million according to David Newman, analyst at Cormark Securities Reuters reported.
"Cash has once again risen to the top of investor concern," RBC Capital Markets analyst Walter Spracklin said in a note Reuters reported.
"There's definitely reason to be concerned," Scott Rattee, and analyst at Stonecap Securities told Reuters. "The layoffs confirm, they are very concerned about their cash position," Rattee told Reuters.
Bombardier saw sales for its commercial and business jets decrease 19 percent last year Reuters reported.
