Lear Profits Jump; Piper Plant to Close
Lear Siegler Inc. reported a 25% jump in net income on sharply higher sales in its second quarter on Wednesday and announced that it would shut down the third of four Piper Aircraft Co. factories that it acquired last year.
The Santa Monica-based conglomerate earned a record $23.1 million on sales of $601.4 million in the quarter ended last Dec. 31, up from profits of $18.5 million on sales of $394.5 million the year before.
The firm said its automotive and commercial-industrial business segments achieved substantial increases in sales and income that outweighed a drop in profitability in the aerospace segment that includes Piper.
Lear Siegler also said Wednesday that it will shut down the 729,000-square foot Piper factory in Lakeland, Fla., by October.
The company already had closed Piper plants in Lockhaven and Quehanna, Pa., last year and consolidated those operations in Florida.
A company spokesman said that some of the Lakeland plant’s 875 employees will be offered jobs at the remaining Piper plant in Vero Beach, Fla. The Vero Beach plant has 900 employees and produces single-engine and twin-engine aircraft. The Lakeland plant produces Piper’s top-of-the-line Cheyenne business aircraft.
Piper has been losing money for several years due to the severe depression in the general aviation industry, which has seen aircraft deliveries decline to 2,400 last year from a high of 17,811 in 1979.
Although Lear Siegler does not break out results for Piper, part of its Bangor Punta Corp. acquisition, the operation is expected to lose $15 million in the current fiscal year on sales of $160 million, according to Larry Lytton, an analyst at Drexel Burnham Lambert Inc.
Lear Siegler Chairman Robert Campion has said the turnaround in the general aviation industry is occurring more slowly than he expected.
Lytton estimated that Piper lost $30 million on sales of $140 million in the last fiscal year. He believes that the firm will break even by fiscal 1986 with $200 million in sales.
Lytton said he expects Lear Siegler to expand its Vero Beach plant after the Lakeland shutdown.
A company spokesman confirmed that an expansion is being studied, saying: “The question would be by how much.”
John Simon, an analyst at Siedler Amdec Securities Inc. in Los Angeles, said he views the consolidation at Piper favorably because it would further reduce the unit’s break-even point.
Simon projects that Piper could return to profitability by the end of the current calendar year.
