It’s not surprising that when the President of the United States – back to the wall and class-warfare knives gripped in his sweaty fists – attacks an industry in speech after speech, sales tend to go down. Especially when that President has a demonstrated appetite for using government power to “punish” companies he dislikes, and a nearly perfect record of failure in choosing “winners” and “losers” in the private sector.
This week Piper Aircraft announced it would lay off 150 permanent employees and let 55 contract people go from its Vero Beach, Florida facility, as it suspends production on the long-awaited Piper Altaire light business jet. Piper employs about 850 people, so those 205 lost jobs represent a substantial chunk of their work force.
This was a project Piper used to be very excited about, as Treasure Coast news site TCPalm explains:
At one time, Piper officials said they had about 160 advance orders for the new jet, which was redesigned and renamed the Piper Altaire to much fanfare last October. The company over the past year has traveled to events throughout the United States with a mock-up of the aircraft.
Piper had been seen by some industry observers as having a leg up on the competition because of the investment being made into the jet program by its parent company, Imprimis. The corporate finance and investment management firm, in conjunction with the Ministry of Finance of Brunei, acquired Piper in 2009.
The local government extended $32 million in county and state incentives to get the Altaire project for Vero Beach, although only about $4 million of public money had been spent so far. The county Chamber of Commerce president thinks the investment was worth it, since it “helped retain about $100 million in the community throughout the past three years,” plus spinoff benefits and the work created for construction firms.
That sounds like a perfect encapsulation of Obamanomics: millions spent to “create jobs” where nothing was actually produced.
The corporate jet industry is suffering from a number of factors, including general recessionary malaise – although business execs are quick to point out that the popular image of the corporate jet as a luxury toy for fat cats is way off the mark, as many companies find them essential to their management strategies.
The effect of class-warfare demagoguery should not be discounted, however. It’s been hurting the corporate jet industry for quite a while now. When Canadian manufacturer Bombardier cut 1,360 jobs in February 2009, Private Jet Daily noted the depressing effects of politics upon the market:
It’s already difficult for manufacturers to deal with the credit crunch—clients no longer have the funds to buy these prestigious aircrafts. Now, they have to deal with a battered image of the executive aircraft.
The National Business Aviation Administration claimed that it’s worried that politicians are hammering private jets without paying objective attention to its benefits—faster travel time and smaller air ports. In fact, corporate jets have more than 5,000 airports in North America compared to commercial planes which only have 500 main airports.
Manufacturers are being hit hard by the economy and harder by the political backlash. Many companies fear that this will force the industry into a downward spiral.
CBS News’ BNET business network noted that American manufacturers Cessna and Hawker Beechcraft were making big layoffs too, and cited politics as a major factor in what it dubbed “a corollary to the AIG Effect:”
What’s happening? Obviously, the credit crisis is a huge driver. Corporate America is having a hard time getting loans for basic operations, let alone $50 million business jets.
But private jets have become a political football, following last fall’s debacle when the heads of Detroit’s Big Three automakers each flew in his own corporate jet to ask Congress for a bailout. The fallout has caused many companies — such as Bank of America, Starbucks and investor fund the Carlyle Group – to announce they’re selling their corporate jets, and the flood of used planes on the market is crushing demand for new ones.
Who wants to spend millions on a corporate jet, only to become the next piñata dangled by a desperate President in front of the Occupy Wall Street crowd he’s trying to romance? Especially since he needs voters to forget about his own performance entirely, and accept his 2012 campaign narrative that he’s been a helpless prisoner of corporate greed during his first four years in the White House, and every time he tries to do something for the people, he steps on the thousands of mousetraps George Bush scattered across the Oval Office carpet?
The Piper Altaire sounds like it would have been a fabulous plane. This not a good time to buy a fabulous plane, even if you need one, and can afford it. A lot of companies can’t afford it anymore, and the near future doesn’t appear to be filled with the inviting sapphire skies of robust recovery, where a new jet might be happily flown. Sadly for the 205 latest arrivals on the Obama unemployment lines, that’s the end of the story. These folks aren’t the Evil Rich, but as grown-ups understand, the Evil Rich aren’t the ones who suffer most during a class war.