Layoffs Follow Biz Jet Bashing

(MoneyWatch)  Call it a corallary to the AIG Effect -- Congressional attacks on business jets as a symbol of Wall Street greed may be exacerbating a decline in aerospace manufacturing in the American heartland.

Last week, two Wichita-based corporate jet builders -- Cessna and Hawker Beechcraft -- announced workforce cutbacks. Cessna, which had already said it's cutting 4,600 people, further announced that it's cutting hours for the remaining workers, to three or four days a week. Hawker, in turn, handed out 2,300 60-day layoff notices on Friday. This comes after it cut 490 people last fall, out of what had been a workforce of 7,700.

In addition, Canada's Bombardier also said it plans to slice 1,360 jobs at its plants in Wichita, Montreal and Northern Ireland. (It's still hiring to fill openings in some of its healthier Montreal-based jet programs, however.)

What's happening? Obviously, the credit crisis is a huge driver. Corporate America is having a hard time getting loans for basic operations, let alone $50 million business jets.

But private jets have become a political football, following last fall's debacle when the heads of Detroit's Big Three automakers each flew in his own corporate jet to ask Congress for a bailout. The fallout has caused many companies -- such as Bank of America, Starbucks and investor fund the Carlyle Group -- to announce they're selling their corporate jets, and the flood of used planes on the market is crushing demand for new ones.

The industry is fighting back, saying that corporate jets allow high-level executives to get more done on business trips because -- unlike those of us crammed into economy class seats -- they've got room to work while in the air. And, just as important, they provide good-paying American jobs. "Manufacturers are being hit hard by the economy and harder by the political backlash," writes Web site Private Jet Daily. "Many companies fear that this will force the industry into a downward spiral."

And some are saying it's hypocritical for President Obama to criticize CEOs for using corporate jets, when he himself flies the most famous private jet of all -- Air Force One.

But while that battling goes on up in the stratosphere, down on the ground in Kansas they're having to cope with the loss of thousands of high-paying manufacturing jobs. FlightGlobal.com reports that "some production lines could be shut for as long as six months, with manufacturers giving serious consideration to curtailing development of new products or permanently shut existing products in a cost-saving measure."

Ever-present Teal Group analyst Richard Aboulafia told Flight that "there's no reason to think growth will return again soon." The goal instead, he said, is merely to "stop the bleeding."