Some words from staff, suppliers and customers

We've all had a little time to absorb the shocks from ABQ in the past 12 days or so. I thought it was right to share with the blog some of the email I've been getting. On the 'numbers' question, before you ask, I'd like to say this. I'm pretty sure that total accuracy on EAC will be as hard to achieve as agreeing the numbers who took part in Pickett's Charge at Gettysburg.

So, with that 'official health warning' herewith some thoughts and the supporting emails.

The blog email started to hum, big time, after Vern's shock announcement at Oshkosh on that fateful Monday. Various people were spotted coming and going at EAC and lots of rumors started flying around. I got caught up in myself and made a serious error in 'firing' several people. So I've been careful to avoid that this time, and have several sources, in almost all cases, for the information below.

The first one comes from a senior staff member who reacted to the layoffs by sending me a long and very informative email. Herewith a flavor of what was written. It goes to the heart of the matter, from someone who was there.

"My heart goes out to the group of good workers who were laid off yesterday. Due to the incompetent attitudes and behaviors of the Executive Staff many friends and good people are wondering what they will do next to provide for their families. I know that many who are still employed at EAC are feeling guilty because they were not chosen to be let go this time and in the back of their minds the question is occurring are they next?

I knew after about 6 weeks that Todd Fierro was the wrong man for this job. He was trying to apply DOT policies to a vehicle that works in two dimensions and not learning about the FAA requirements. He was making decisions that were just stupid, he was not consulting his staff of Managers who could have turned the tide around so that there would not have been the massive lay off there was yesterday.

20 Year Mechanic is right about all he has written in the blog. But most of I respect him for his ability to stay the course to make the EAC500 a safe and wonderful craft. I hope for the sake of all involved that they can see farther down the road and project a good future for EAC and for the good of New Mexico, we need to keep the doors open. There needs to be a general house cleaning with the Exec. Staff and not the "worker bees." You cannot lead by pushing, leaders have to lead from the front and the Exec. staff does not.

Mr. Raburn tried to make his craft fly before it could crawl. Again a waste and this attitude has impacted my home and my friends!

I can only hope that at some point that all the unqualified VP's are moved into mere manager positions so that they can face the general population that they angered over their inept and cowardly actions towards their charges, the employees of Eclipse, investors, and the purchasers of the EAC500. No responsibility has been taken by any one of those sons and daughters of snakes, the Executive Staff.

Karma has a way of catching up, if not in this lifetime most certainly in another."

This email was signed, and the person concerned has given permission for its use in this context.

Now we should move to the staff lay off. EAC have a company line, which says two things. One is that 650 people were laid off. The other says that 38% of the total employed were laid off. Everyone who has contacted me says that between 750 and 800 individuals got pink slips. EAC say that 1,100 positions continue in the company, when almost everyone says there are less that 900 actual people left.

How do we reconcile this? The straight answer is that 'we' can't. EAC have a poor track record with numbers. The state of New Mexico is compromised in any investigation under WARN legislation. It has after all, financial interests in the company, in several ways. I'm pretty sure the truth will out eventually, but right now, the picture remains clouded.

A short snippet from one of the suppliers:-

"EAC is returning $40 million in deposits. EAC needs to pay suppliers $60 million and that does not include volume reconcilliation since they did not achive the number of aircraft they forecast so you can add 10% and call it $66 million. They say the USA brand is "dented" so most future sale will be from Russia/Europe etc. The UBS financing guy doesn't even have an investor lined up and this is not a done deal but they feel real confident they will find a real jackass of a company to invest in this mess... OK, my wording. "experts" tell them they can do 2/day... All suppliers said bullshit to that. The ramp down was due to funding....of course. It takes 6000 hrs to build an aircraft and they need to take it down to 4050 hours. They say there are 1000 firm orders and 1100 employees. the bright news was that no one was cocky and they begged to keep suppliers on board. Everyone had a NEW attitude, a NON Vern one....but get this, they won't commit to keeping us on the E-400...that pissed some suppliers off!"

This is representative of the word from suppliers and is indeed a sad one. Many are owed multi million dollar sums and most now only deal with EAC on a 'pre pay' basis, and are hoping that something will come up to resolve the debt. Roel has offered those with bills outstanding the by now standard '6% interest' on their money, but everything depends on the UBS funding, of course. They even offered people who turned up for the conference a ride in the FPJ.

There is no truth whatsoever in the rumor that suppliers picked straws to see who HAD to fly in it...

Customers continue to have real issues. Simple service requests are not being dealt with, parts take forever to arrive, the slow down in production announced by EAC has impacted the delivery schedule and therefore the possibility of collecting the 60% '6 month prior to delivery progress payment'. And thats for the people who have stayed the course. For the very first time, reliable information has reached me on the number of deposit backed orders that were actually placed with the company. After all the dross is discarded (DayJet etc) there are just over 900.

This from another senior staffer:-

"We did get $$'s on all orders except DayJet (in the latest messaging these orders are gone), and for most of the 900 it is a 100K+ deposit. Bad news is that with almost 300 refund requests those full deposits are due back to the customer....."

Yes, I know it seems high, but remember that many people took two, three, four or in one case I'm aware of SEVEN positions. It's also over 8 years since Vern started taking deposits. Remember also that the total money collected is hard to calculate, since the first deposits were less than the later ones. Most seem to have paid about $150,000. So, how many people have asked for their money back?

As you can see, I'm told that about 300 have sought their money back. A total of '$45 million' (many paid a higher deposit) is required to keep these people happy. Roel has also stated that 'some' of the depositors have changed their mind and have asked to get back in line for a delivery. I suspect that these are people who have a very early position, and are looking at paying the price increase and getting an FPJ, or very probably loosing everything.

Other items include ongoing rumblings about senior staff, some of whom are moving 'sideways', a veritable feeding frenzy of recruitment events around ABQ and ongoing press coverage of the Ice Blue suit. I'm also hearing that one supplier in particular has been awarded '$7 million' after due process. Another couple of hits like that and the company will need serious cash, real fast.

I think I've covered a few of the bases there. Enjoy your 'Labour Day' long weekend, fly/drive/sail safe and have fun with your families and friends.

Shane