December 11, 2012
Piper Aircraft is pledging to maintain an employment base of at least 650 workers under an amended agreement with the state of Florida that will enable the company to keep incentive money it received as part of its original contract with the state.
Piper in 2008 agreed to keep the company in Vero Beach, Fla., after the state had provided an incentive package of up to $32 million based on certain investment and workforce guarantees. The guarantees included the creation of about 450 new jobs by 2012, in addition to maintaining the workforce that was close to 1,000 people at the time. Piper had received an initial payment of $6.6 million from the state. At the time of the agreement, the economy was still fairly strong, and Piper had envisioned developing a single-jet aircraft. But shortly after the agreement the economy collapsed, forcing Piper to lay off hundreds of workers and defer taking additional payments. The company also subsequently shelved its single-jet project.
Piper has slowly rebounded with improving deliveries and sales. But the piston and light turbine market has remained soft, preventing the airframer from rebuilding its workforce to earlier levels. Piper, unable to meet the guarantees of the original agreement, asked the state to renegotiation, citing the “unusual market realities for new aircraft sales and employment in the future.”
Under the amended agreement, Piper will be able to retain half of the $6.6 million it received. Piper says Florida permitted this since the company exceeded its capital and research and development investment obligations by $30 million. The agreement further would permit Piper to keep the remaining $3.3 million if it meets employment obligations over the next four years. These included retaining 650 full-time workers with an average salary of $46,500 over the four-year period.
Each year the company meets this target, its repayment obligation for the outstanding $3.3 million is reduced by 25%. If it fails to meet the thresholds, then the company would be obligated to repay “significant amounts plus penalties.”
Piper, which also had received incentive money from Indian River County, similarly is renegotiating its contract with the local authorities.