Erickson layoffs land hard in Jackson County
Erickson announced Thursday that it was laying off 150 of its employees. The pain grew locally on Friday as it became clear that virtually all of those jobs were going to come out of its sites in Jackson County.
Erickson blamed slumping oil prices in part for the layoffs. The drop has caused energy exploration firms to cut back, meaning the support services provide by Erickson's fleet of heavy lift helicopters, including S-64s manufactured and maintained here in the Rogue Valley, are in less demand.
Logging operations utilizing Erickson aircraft have been in general decline. Last year's fire season, as terrible as it was in some locales, was one of the quietest on record. Add to that the financial pressures of managing payment on debt incurred as the company grew by acquisition and the beating its stock has taken in the past year, and company officials said it was clear something had to be done.
So, as has been the case more than once in the past, Erickson slashed its workforce primarily in Jackson County, where 145 employees at its plant off Willow Springs Road and its Medford airport facility were laid off.
Erickson's stock reached a high of $28.10 in May 2013, but has bounced between $6 and $8 lately. The company shed employees during the past year, but nothing approaching this week, as the cuts left the company's global workforce at about 850.
"We've cut deep," Erickson spokeswoman Susan Bladholm said Thursday. "(CEO) Udo Rieder shared with the remaining employees the intent has been to cut deep and to right-size so we can minimize the need for coming back in a couple of quarters, or whatever, and doing this again. I don't know if that has been the practice in the past, but it certainly is the intention for this round."
Following the 2013 acquisitions of McMinnville-based Evergreen Helicopters and Air Amazonia Serviços Aeronauticos of Brazil, Erickson appeared poised to aggressively pursue contracts in virtually every hemisphere, softening the blow of the loss of military contract income that had sustained Evergreen.
But global oil prices tumbled unexpectedly, and with shareholders expecting improving results every quarter, the company was forced restructure into smaller units. From pilots and flight crews to mechanics and engineers, Erickson found itself with redundancy at every turn in a down market.
Rising fuel costs weren't a problem for Erickson, so the drop wasn't a real benefit either, Bladholm said.
"We'd typically pass through those costs to customers," she said. "Unlike airlines, we don't hedge fuel costs, so there wasn't a whole lot of impact for our operations. The fact was that a number of our major prospects and clients were cutting back services."
S-64 work and manufacturing schedules for the next generation Skycrane are affected as well, she said.
"We will continue to do manufacturing but we are on a slower schedule for the next aircrane," Bladholm said. "We have fewer people in that business segment so it means it will take a longer time for that build."
Over the long haul, Erickson may rebuild its staff.
"We're hoping we're going to continue to grow and build back, but some lessons have been learned," Bladholm said. "It's a complex business. We have a strategy with four business units, a change in the evolution of the company."
Whether it was built into the reorganization plan isn't clear, but Erickson is expected to announce a new maintenance partnership with another manufacturer on Monday.
"We'll be doing service work for them, so they will refer their customers to us," she said.
Reach reporter Greg Stiles at 541-776-4463 or firstname.lastname@example.org. Follow him on Twitter at www.twitter.com/GregMTBusiness, on Facebook at https://www.facebook.com/greg.stiles.31, and read his blog at www.mailtribune.com/Economic Edge.