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August 31, 2016 | Aero Industry Update: Waiting For Axe to Fall at Honeywell and Boeing

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Here’s an “Aero Industry Update” from a contact who works at Honeywell. His past comments have proven to be accurate. He now waits for the axe to fall due to cancelled orders and lack of demand.

Honeywell Employee writes ….

Hi Mish,

I am still waiting for the ax to fall at Honeywell in US. Reduction in force (RIF) has already hit the company’s sites in Mexico and Europe and US contractors are gone, but US RIF is on hold until Sept 13 at earliest because of WARN Act 60 day notice.

The axe will happen by the end of quarter. There’s lots of pressure coming from OEMs who are seeing big drop in demand from airline customers. Boeing is freezing prices so margins are getting pinched. Airbus customers are delaying deliveries because orders are not coming in. Bizjets orders are off too. The biggest weakness is from China, Brazil and Canada. Trouble is across entire the industry.

There’s lots of layoff rumors, particularly with old hands near retirement who volunteered for RIF. Employees now play games with layoff severance package and pensions, pushing some to pull trigger and retire now rather than wait for a package in September.

The games have caused management delays with internal work reorganizations. Employee reviews ask all engineers to confirm if they are willing to relocate to other sites. Lower level managers not in the loop on future plans.

There are rumors of two week unpaid furlough in November for remaining employees. Nonproduction employees had a one week furlough last December and just had another unpaid week in July.

Honeywell Employee

Mike “Mish” Shedlock

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August 31st, 2016

Posted In: Mish Talk

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