GE Aviation to lay off nearly 200 in Newark
NEWARK – GE Aviation is laying off nearly its entire workforce in Delaware as it copes with a devastating drop in airline travel amid the COVID-19 pandemic, the company reported.
A subsidiary of the conglomerate giant General Electric, GE Aviation is one of the world’s largest manufacturers of commercial airplane engines for companies like Boeing and Airbus. Its Newark plant, located at 400 Bellevue Road, employs around 200 workers, who build advanced aircraft engine components made of ceramic matrix composites (CMCs).
On June 29, the company notified the state that it intended to permanently lay off 194 workers in Newark. A company spokesman told Delaware Business Times that the layoffs will be implemented in a few phases, with most occurring in July and continuing to the end of 2020.
“These actions are consistent with previously-announced plans to reduce our workforce and consolidate operations due to the unprecedented impact of COVID-19 on the commercial aviation industry,” said Richard Gorham, spokesman for GE Aviation. “We appreciate the commitment of all our employees during this difficult time, and we regret having to take this action. We remain focused on protecting the safety of our employees, continuing to serve our customers, and preserving our capability to respond as the industry recovers.”
Despite laying off nearly all of the plant’s employees, Gorham said that GE Aviation does not plan on closing the facility. A small number of production staff will remain in Newark in order to fulfill the terms of military contracts that GE has secured, Gorham said.
“We also have the potential to compete for some new contracts there, so we’re optimistic that we might be able to win some additional work,” he added.
The layoffs come amid an unprecedented period of decline for air travel, with U.S. airline passenger volume as of last week down 78% compared to last year due to government lockdowns and decreased consumer confidence amid the pandemic, according to Airlines for America, an industry trade association. That decline in travel has in turn grounded 2,267 planes, or 37% of all U.S. passenger airplanes, as of July 5.
With thousands of planes not in use and few passengers on the thousands still taking off, airlines are mothballing plans to buy new planes to replace aging models or expand to new markets. The International Air Transport Association (IATA), another trade association, reported that new airplane deliveries were down 40% as of May from expectations at the start of the year. That downturn has trickled down to the parts suppliers like GE Aviation.
In early May, GE Aviation announced that it would cut 25% of its workforce worldwide, or about 13,000 workers, in order to resize its business “consistent with the forecast of our commercial market.” The permanent layoffs come after GE Aviation instituted temporary furloughs at many of its facilities in the spring. It also cancelled merit step increases, froze hiring, and cut spending on non-essential operations.
Newark was not the only GE Aviation site affected, as its Cincinnati-area plant saw more than 600 layoffs reported in June.
The mass layoffs come less than a decade after GE Aviation invested $27 million into the Delaware plant though. The company developed a “lean lab” here, that combined engineering and manufacturing to test a CMC production technology’s readiness before mass production.
GE Aviation banked on the ceramic composite material to differentiate its next-generation engines, which achieve higher fuel efficiency, lower emissions, and improved environmental performance by allowing them to run hotter. The engines proved popular, with more than 3,300 delivered in the last seven years, including 272 in the first quarter of 2020.
Unfortunately, one of the primary vehicles to use GE’s CMC engine was the Boeing 737 MAX, which has been beset by crashes that killed 346 people due to its autopilot technology. The company has sat on billions of dollars of 737 MAX-destined parts since the planes were grounded worldwide.
Despite the 737 MAX and COVID-19 pandemic pitfalls, GE Aviation said that it will continue to invest in the CMC technology.
“We remain fully committed to CMCs as one of a suite of technologies that help differentiate our latest generation of commercial and military engines,” Gorham said.
In a July 10 statement, U.S. Sen. Tom Carper (D-Del.), who had heralded the news of GE Aviation’s Newark expansion seven years prior, called the layoff news “another reminder of the damaging effects that COVID-19 continues to have not just on our economy, but on the lives of our friends and our neighbors.”
“While we know that the airline industry has faced unprecedented challenges as a result of the coronavirus pandemic, we hope that the decision to keep the Newark plant open will allow jobs to come back to Delaware once commercial travel picks back up. In the meantime, we stand ready to work with Governor Carney’s team to make sure that the employees at the Newark plant and their families get the assistance to which they are entitled in the months ahead,” he added while also emphasizing that a comprehensive national strategy to tackle the pandemic and ensure testing for and tracing of the virus is desperately needed.
By Jacob Owens