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Originally published Saturday, November 15, 2008 at 12:00 AM

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Aerospace supplier Korry Electronics plans layoffs

Esterline Technologies' Korry Electronics unit plans significant layoffs at its Seattle facility in anticipation of a substantial aviation industry downturn next year.

Seattle Times aerospace reporter

Korry Electronics, a Seattle manufacturer of airplane cockpit displays and control systems, is set to announce significant layoffs next week in anticipation of a substantial aviation-industry downturn in the year ahead.

The news from Korry, a subsidiary of Bellevue-based Esterline Technologies, indicates that big aerospace manufacturers, including Boeing, will also face bleaker times ahead.

About 70 people could lose their jobs out of a work force of almost 660, said a person briefed on Korry's internal financial targets who asked not to be identified.

In an interview, Korry President Dan McFeeley said the layoffs will affect all levels of the company. He said the precise number is not yet decided but will be "less than 100."

"We're trying to tighten our belts now and be prepared for a downturn," McFeeley said. "We'll try to make a single cut that will be deep enough to carry us through this turmoil.

"What looks solid right now, not just Boeing but everybody, is definitely questionable to us."

McFeeley said airplane-parts manufacturing has been hit by a "double whammy": the financial-system meltdown and a looming recession in the general economy, added to months of huge losses in the airline business stemming largely from high jet-fuel prices.

He said that although jet-fuel prices are now sharply lower, airline revenues and profits likely won't pick up sharply because of the new pressure on consumers from the general economy.

"If people aren't shopping, they probably aren't going to be flying either," McFeeley said.

He said revenues were down 10 percent in the second half of the fiscal year that ended last month, compared with the first half.

Korry makes systems for all Boeing aircraft, as well as for Airbus and for business and regional jet makers. Looking ahead, McFeeley said he sees softness across its entire customer base.

Boeing said Friday it is pushing out first delivery of its new 747-8 by about nine months. Boeing insisted that the 105 orders booked for that airplane are solid, and attributed the delay mostly to required extra design work, but McFeeley sees it differently.

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"Boeing said it's not because of order softness, but we know it is," he said.

Although both Boeing and Airbus have orders enough to fill production for several years, some could melt away while others will be deferred for a year or two.

Airbus "is already seeing softness in '09" and is changing its forecast, he said.

McFeeley said Korry's business-jet customers are also looking at evaporating orders.

"Their order books, which were thought to be absolutely rock solid two months ago, are now flopping all over," McFeeley said.

He said Korry will go ahead with a planned relocation next fall from its facility on Seattle's Dexter Avenue North to a new plant at Paine Field in Everett.

Korry also has canceled its usual Christmas party and tightened other expenses.

"We're taking measures based on everything we see," McFeeley said. "We're not losing money, and we don't intend to," he said. "That's how you keep people employed long-term."

Dominic Gates: 206-464-2963 or dgates@seattletimes.com

Copyright © 2008 The Seattle Times Company

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