Contract Mechanics Hard Hit, But Cargo, Storage, OEMs Save Some Jobs
When the government tries to stabilize employment in an industry like aviation, it is hard to cover every industry element. Especially vulnerable are contract mechanics and the companies that supply them. Still there may be ways reassignments can save some jobs.
Launch Technical Workforce Solutions supplies technical workforces at about 400 aviation locations, including airlines, MROs and OEMs. That diversity certainly helps, according to CEO Mike Guagenti.
Nevertheless, the passenger traffic collapse of 2020 has hurt. “Commercial traffic has been decimated,” Guagenti says. His billable contract mechanics that supported commercial aviation have been released, with a few notable exceptions.
First, mechanics that support cargo operations have not been hit, and Launch has been able to move some workers out of passenger to cargo support.
Second, there has been increased demand for workers at storage facilities, and Launch has moved about a hundred contractors to storage sites.
Finally, Guagenti says some manufacturers are still growing, and jobs there have stayed steady.
So the overall decline in billable contractors has been about 40-50%, levels that the CEO believes have finally stabilized. But he does not expect much recovery until 2021 or possibly the end of 2020.
Guagenti says he has been frustrated with the assistance terms of the recently enacted Coronavirus Aid, Relief, and Economic Security Act (CARES). CARES loans are not really attractive to Launch or available, given the company’s size. “We have a credit facility at a large bank and access to capital that is more attractive, so we will likely not seek a loan.”
However, Launch is looking at CARES payroll protection provisions, and Guagenti says, “The tax deferrals have value, especially for Social Security taxes.” Launch managers spent the week of March 30 reviewing the terms of CARES with accountants and lawyers.
“I think we will probably apply for assistance, but I don’t know which kind yet,” Guagenti says. He believes CARES gave primary attention to airlines, but did not “flow through” the protection to the aviation supply chain, including companies like Launch.
Launch’s own, non-billable staff is now working from home, after a reduction in head count in the last two week. Guagenti is focusing on reducing costs and deferring spending. He is not anticipating further cuts in staff, and believes the company is now in a fairly stable position to weather the crisis.