WICHITA, Kan. (AP) -- Aircraft maker Hawker Beechcraft Corp. said Monday it will lay off about 5 percent of its worldwide work force -- about 490 workers -- in expectation of declining sales amid the global economic downturn.
The layoffs will begin in a few days and affect hourly and salaried workers, spokesman Andrew Broom said. Employees were being notified of the reductions in a letter mailed to their homes Saturday from chief executive officer James Schuster.
"Our whole philosophy is we need to act quickly because prolonging it is difficult for our employees and their families," Broom said Monday.
Hawker Beechcraft has about 9,800 employees, including about 7,000 at its Wichita plant. Broom said he did not know how the cuts would be distributed.
"We expect to see eventual erosion in new aircraft orders and deliveries, so we have to do certain cash saving measures," Broom said. "That includes reducing production ... to match potential declines in customer demand, reducing inventories and curtailing capital expenditures."
Following those steps, the company concluded that layoffs were also needed to reflect the reduced production plan, he said.
The layoffs were not entirely unexpected.
In a letter to employees two weeks ago, Schuster said the company would act to ensure it was prepared for a "very challenging period" during the turmoil in world financial markets.
Schuster noted in the letter that Hawker Beechcraft is highly leveraged, carrying nearly $2.4 billion in debt. This year's interest expense will be close to $190 million, or more than $500,000 a day, he said.
Schuster said such debt forced the company to be exceptionally diligent in managing its operations, meaning the tightest possible focus on fundamentals -- delivering aircraft on time and on budget; improving quality and reducing warranty cost; completing product development programs on schedule; improving productivity; and providing customer support.