According to a story in today’s St. Louis Post-Dispatch, plunging commercial jet orders have aircraft parts and engineering service provider LMI Aerospace eyeing a sale of its Cuba manufacturing plant as a way to unload excess capacity as it weathers the aviation downturn. Local employees were reportedly informed of the plan last week.
“Over the years we have had people express interest in the Cuba facility,” Brian Salmo, LMI’s vice president of human resources and general counsel, told the Post-Dispatch. “Across LMI’s footprint, we now have extra capacity for these services, so we’re interested in exploring a sale of the Cuba site. We are in discussions with several prospects and we have shared this information with employees.”
LMI, which is based in St. Charles, Mo., will continue operating in Cuba, where it does chemical processing and aerospace surface work. The local plant currently employs about 100 people, down from about 150 at the beginning of the year.
Like much of the U.S. aerospace industry, the Post-Dispatch reported, LMI was already hurting from the grounding of Boeing’s 737 Max in March 2019—a year before the COVID-19 pandemic devastated airlines and their suppliers. In 2017, one analyst estimated the 737 made up 30 percent of LMI’s revenue. Salmo said the 737 remains a “significant program” for LMI.
It was recently reported that Boeing disclosed that it sold no planes and canceled 43 Max jet orders in July.
Since the start of the pandemic, LMI has reduced its workforce by about 600 people in factories located in Kansas, California, Washington and Oklahoma and currently has about 1,600 employees, according to The Wall Street Journal. That has included about 350 furloughs and layoffs in Missouri, including at its two St. Charles locations and factories in Cuba and Washington. LMI said in late 2017 that it had more than 700 employees at its Missouri facilities.
According to the Post-Dispatch, Salmo said the sale of the Cuba facility is an attempt to position LMI to “weather what is a very difficult market.”
While some of the impact on LMI has been offset by strong military orders at Boeing, LMI and other firms in the aviation supply chain are looking to Congress to help keep workers on the payroll as the industry faces the dual crises, according to the Post-Dispatch report. Reps. Ron Estes, R-Kansas, and Rick Larsen, D-Washington, introduced legislation in the House on Tuesday that would let companies like LMI designate up to 25 percent of their workers as at risk for furlough. The U.S. Treasury would then cover 50 percent of those workers’ compensation. A similar bipartisan bill was introduced in the Senate in May. Sen. Roy Blunt, R-Missouri, is one of the co-sponsors.
Salmo told the Post-Dispatch the legislation could help companies like LMI retain skilled engineering workers who might move to another industry if they get laid off or furloughed. “While demand is down for aviation products, it’s in the country’s best interest to ensure critical skills remain engaged in the aerospace industry,” Salmo said. The Aerospace Industries Association—a trade group LMI belongs to—threw its support behind the legislation this week.
“With global air travel down 86 percent from a year ago in June, the aviation manufacturing sector has continued to face a near-steady stream of aircraft order cancellations,” AIA President and CEO Eric Fanning said in a statement. “This, in turn, puts the skilled aerospace and defense workforce at risk, forcing significant layoffs and furloughs in companies large and small.”