INDIAN RIVER COUNTY — While Piper officials tout the continued development of the PiperJet and a 75 percent increase in airplane deliveries this year, there are ominous signs that one of Indian River County’s biggest employers is struggling.
Company officials have backed off the rosy projection provided just a few weeks ago of delivering 67 more planes in the 2010-2011 fiscal year than the 90 they sold the year before.
And just last week, Piper put everyone except the engineers working on the PiperJet on a one-week unpaid furlough, a clear signal plane sales were falling short of expectations. Then there are the front office shakeups since Singapore-based Imprimis took ownership of the company in May of 2009.
The new owners have gone through two CEOs, a company president, chief financial officer, vice president of sales and marketing, and director of sales. It acrimoniously fired its long-time public relations firm as well.
Most of the now-departed senior management are barred from talking publicly about the company as part of their severance packages, but former Chief Spokesman Mark Miller has filed suit against Piper, charging breach of contract.
Among other things, Miller claims that the company had him misrepresent facts to the media. The suit does not go into detail about when or what misstatements Miller made to the media.
The company has vehemently denied the allegations in Miller’s suit, which asks for $140,000 in unpaid income Miller says is owed him through the end of the year.
Miller has also claimed he was told by company officials that Piper was experiencing financial difficulties and that is why it could no longer retain him through his public relations company, the Carlisle Group.
The lawsuit, though not unusual coming from a now-disgruntled representative, nevertheless raises questions about whether Piper, the beneficiary of a $32 million deal in state and local incentives to stay in Indian River County, has been forthcoming about its ability to maintain operations here.
While employment is up considerably from the low it hit during the recession, it remains far under the level specified in the incentive package.
Piper thus far has received $10.6 million from the state and county, money that was used – as stipulated – to refurbish factory facilities. The company had reached a low of about 550 fulltime employees in 2009, but had begun hiring workers back late last year as the sales outlook began to improve.
Still, to meet the requirements for a second payout from the government incentive package, Piper, among other things, needs to have 1,166 full time employees and to have made a public commitment to spend $10.6 million in tooling, equipment or facilities and infrastructure improvements.
Piper officials say the company remains focused on continued development of the PiperJet, which with a projected price tag of $2.2 million when it hopefully goes on sale in 2013, would put the company at the low end of the very light jet market.
The company is shifting strategy to brand itself as an international operation and is focusing on fleet sales of its line of propeller planes to flight training schools in emerging markets around the world.
Aviation consultant Brian Foley said Piper is doing the right thing by focusing its attention beyond North America.
But breaking into burgeoning worldwide markets remains a constant challenge. The company was working on a big order of trainer aircraft in Asia, but that deal for as many as 40 planes is now on hold.
“That is more about timing than losing,” said Randy Groom, who came on in April as Executive Vice President. “Asia is a very high growth region for us right now, our owners are from Asia and there is a lot of activity and there is a lot of demand. But then there is the time it takes from when you first start talking to a potential customer to the time you actually close the sale on 10, 20 or 40 airplanes, it takes a while.”
Groom said the company closely monitors demand against its labor force, which right now numbers around 900 employees. He is unable to say with certainty that there will not be more layoffs or a reduction in hours in the months ahead.
Company officials also say the PiperJet remains on schedule for delivery in 2013.
Imprimis Managing Partner Stephen Berger has said that his financial company would not have considered purchasing Piper if it were not for the PiperJet, and Imprimis has already sunk millions into its development.
What is not as clear is the ownership’s commitment to the rest of Piper’s aircraft. Groom said they see a flat domestic market, but opportunities overseas. He has spent much of his first months at Piper putting together an international sales team to expand Piper’s brand overseas.
The abrupt resignation of former CEO Gould last month offered evidence that problems remain. The company is currently being run out of Brunei on an interim basis by Stephen Berger’s brother, Geoffrey, who is Managing Director of Imprimis’ Brunei operations.
The company has shown an inclination to beef up its operations in that tiny island nation. The Brunei government supplied the money to fuel Imprimis’ purchase of Piper, as it looks to diversify its economic base.
Though some might see signs to the contrary, Richard Aboulafia, vice president of analysis at Teal Group, an aviation consultancy and research group, said he wouldn’t expect Piper to be pulling up stakes in Vero Beach.
“Nobody ever really does that,” he said. “I am hard pressed to think of anyone who has successfully moved aircraft production lines in a seamless way.”
Groom said expansion in the owners’ backyard is inevitable – especially given the Asian economic climate.
“They certainly want to build up their Asian business,” Groom said of the owners. “We are going one step at a time. We have people based in Brunei and are selling our planes out of there. I am moving a regional sales director and we are looking at putting in a flight training school in Brunei as well. We will see from there what makes business sense.”
But he adds: “Vero Beach is the home of this company, we love it here.”