Top executives of bus builder New Flyer Industries Inc. said Tuesday there are no indications other customers are rethinking their purchase plans despite the deferral of a contact in the United Sates blamed for the loss of more than 300 jobs.
New Flyer announced Monday it was laying off 320 people because of production disruption caused by the indefinite deferral by the unnamed "large, U.S.-based customer."
The deferral was because of "an unanticipated delay of state funding," Paul Soubry, president and chief executive officer, told a conference call on Tuesday.
"We have not been advised by any other customers of any other material funding issues, nor has it (the company) received any other deferrals of firm orders from other customers," Mr. Soubry added.
He said negotiations continue with both the customer and state officials to get the order moving again.
The reason for the funding delay was not explained and it was unclear if it involved U.S. stimulus funds.
However, Mr. Soubry said New Flyer has receiver orders over the last quarter to purchase buses "fully or partially funded" with U.S. stimulus funds worth $213-million (U.S.) in sales.
Citing both engineering and customer delivery constraints, Mr. Soubry and chief financial officer Glen Asham said the loss of production of the 140 articulated diesel-electric hybrid buses that was scheduled to begin at the end of July could not be easily replaced with other orders in the company's backlog.
The job losses involve 270 unionized workers in Canada and the United States and some 50 salaries staff, most at New Flyer's head office in Winnipeg.
Although all the work on the now deferred contract was being done at the company plant in St. Cloud, Minn., New Flyer has adjusted its workload to split the impact evenly between workers in St. Cloud and Crookston, Minn., and its Canadian work force in Winnipeg, the executives said.
"Its really been a difficult decision to have to lay off some people but ...what we are trying to balance is current customer requirements and deliveries, the long-term stability and job retention of our employees and (their) skills but also a quick and efficient movement on costs to ensure performance for our shareholders," Mr. Ashram said.
Mr. Soubry and Mr. Asham said the company was able to reduce the size of the layoffs by deciding to halt production at all its facilities, except for a skeleton crew, for the last two weeks of this year.
They refused to disclose either severance costs or savings as a result of the layoffs, saying only that they are included in guidance for the year which predicts an improvement compared with 2008.