In late July, the news publication the Waterloo Region Record ran a story about layoffs by Honeywell at its Cambridge, Ontario facility. The number of people laid off was not disclosed at the time. However, local radio station News 570 reported on September 1 that 140 people had started to receive notice in late July. Scott Sayres, Honeywell Director of Communications told SpaceQ that the workforce before the latest layoffs was approximately 550, meaning, if the reported 140 layoffs is accurate, that an approximate 25% reduction in workforce has taken place in this latest round of layoffs.
A 49% Reduction in Workforce
Sayers told SpaceQ that not all of the workforce reductions since Honeywell acquired Com Dev are due to layoffs. Attrition and voluntary departures “count for a significant portion.”
It was only 1 1/2 years ago that Honeywell acquired COM DEV International. When the deal closed the Cambridge facility employed approximately 800 people according to Sayers. Today, with the latest round of layoffs, that number is approximately 410, an almost 49% reduction in the workforce.
By law Honeywell is required to provide notice to the Ontario government of a Mass Termination of more than 50 people. SpaceQ has confirmed that Honeywell did submit the appropriate notice to the government.
Sayers provided the following statement on the reason for the layoffs, “the global Space and Satellite industry has seen a general downturn over the last several years, resulting in reduced customer demand. We’ve made the difficult decision to realign our manufacturing and engineering workforces in the United States and Canada that support our Space business to better match current market requirements. We will use attrition and voluntary departures to mitigate this reduction and also offer severance and outplacement services to all eligible employees. We are constantly looking for new growth opportunities and remain confident in the long-term outlook of the Aerospace business.”
Ironically, just before the latest round of layoff notices went out, Honeywell reported better than expected second quarter results on July 21 with US$10.1 billion in revenues.
Darius Adamczyk, President and Chief Executive Officer of Honeywell said at the time, “Honeywell’s strong performance continued through the second quarter, with over 3% organic sales growth that exceeded the high end of our guidance range, and 50 basis points of segment margin expansion, resulting in second-quarter earnings per share of $1.80.”
The company has seen some rough years due to the great recession which began in 2007. However, in the last few years Honeywell has turned things around and seen its revenue climb along with its stock. But while the company as a whole has been doing better, the Aerospace unit has had some difficulty and there have been numerous layoffs at several of Honeywell’s aerospace locations.
While Honeywell’s aerospace division has had problems, the global industry as a whole aren’t doing too bad. It was a just a month ago that the Space Foundation reported that 2016 global space revenues had recovered from the previous year. Revenues for 2016 were US$329 billion globally, an increase from US$323 billion in 2015.
No Space Plan, Forced Layoffs, More to Come
Two well placed sources told SpaceQ that not all of Honeywell’s problems in Canada are related to the global downturn in the space and satellite industry. While the global downturn, specifically in the geostationary satellite market, has impacted many companies including MDA’s U.S. division SSL, a lack of Canadian government procurement and no clear space policy has contributed to the problem.
And the problem is not getting better. One source called it a “triple whammy” of a downturn in the commercial market combined with no new civil or military space procurement.
While a new Defence Policy was released in the summer, expected requests for information won’t be coming until possibly the fall. Then comes the expected request for proposals. It could be a year from now before a procurement takes place. Also, with no new space strategy or new programs on the civil side, sources tell me that more layoffs could be forthcoming for other companies in Canada.
Both sources indicated that the governments lack of action is coming to roost now. Layoffs have happened as a direct result of government inaction. To make matters worse, one source said, inevitably some of those laid off will head south of the border for employment or to foreign shores.