On the campaign trail, U.S. Republican presidential candidate Donald Trump balks at the idea of outsourcing jobs to Mexico.
But here in Santa Maria, Zodiac Seat Shells, one of the city’s largest employers, may be going that route.
According to a Worker Adjustment and Retraining Notices (WARN) report filed with the California Employment Development Department (EDD) on Aug. 19, Zodiac Seat Shells U.S. LLC is laying off 205 permanent employees by Oct. 26, one month before the Thanksgiving holiday. That’s in addition to the 168 employees that were laid off starting June 22, according to a previous WARN report filed in April.
When asked by the Sun in June, then-Zodiac Human Resources Director Silvia Espino downplayed the layoffs. She said that only temporary workers are being let go, contrary to the WARN report.
California law states that employers are required to give 60 days notice to their employees in advance of a mass layoff. The law states that temporary workers are to be notified as well, although the Sun couldn’t find WARN reports pertaining to temporary employees.
Glenn Morris, president and chief executive officer of the Santa Maria Valley Chamber of Commerce, looked into Zodiac’s layoffs. He described what Zodiac is doing as “rightsizing,” as opposed to downsizing.
“What they tell us is that as they caught up on all of their back orders and they evened out the production cycle,” Morris told the Sun. “They don’t need the same number of people they brought in.”
What is clear is that it will impact the local workforce economy, according to Morris.
“Any time we’ve got workers that are being released, it’s an impact on the community,” he said. “These are people not bringing income and not able to contribute to the overall community.”
Santa Maria is still rebounding from a high unemployment rate. As of August, EDD reported a preliminary unemployment rate of 5.8 percent for the city. That’s a decrease from 6.1 percent from August 2015 and 9.1 percent in December 2014.
Morris’ hope is that the laid-off workers will quickly find jobs elsewhere in town, and he’s confident they will. He reached out to the Santa Barbara County Workforce Development Board to offer services to the workers, such as job searches, and interview and resume skills.
Mark van de Kamp, Santa Maria’s public information officer, said the company notified the city of the layoffs. Rick Hayden, Santa Maria’s city manager, is trying to set up a job fair to assist the laid-off employees, van de Kamp said.
The Santa Maria plant is a subsidiary of Zodiac Aerospace, a global company based in Plaisir, France. It manufactures and assembles parts for seats used in business-class airplanes. It has a separate facility in Chihuahua, Mexico, that’s tied to production. The company is the one of the largest non-farm employers in the area, according to the Santa Maria Valley Chamber of Commerce.
Zodiac, a publicly traded company, more than doubled the size of its workforce between 2011 and 2013, according to the Pacific Coast Business Times, growing from 485 employees to more than 1,100.
In March 2015, Reuters reported that Zodiac shares dropped 4.3 percent in one day, the biggest decline since 2012. This followed missed deadlines for seat production, a strike at a plant in Texas that also affected production, and problems at the Santa Maria plant, Reuters reported.
The news agency also reported that executives of Boeing “one of Zodiac’s customers” said Zodiac failed to “prepare adequately” for a ramp-up in airplane production.
Reuters reported that executives from Boeing and Airbus (another Zodiac customer) were frustrated by the delays, and that at least one of the two plane manufacturers discussed the possibility of removing Zodiac from its seat catalogs. Zodiac’s seat business makes up about a quarter of the company’s nearly $4.6 billion annual revenue, according to Reuters.
Zodiac Chief Executive Officer Olivier Zarrouati declined to comment to the news agency on these matters.
Reviews from current and past employees on glassdoor.com, a job search engine and review site, highlight problems with leadership within the company.
“Corporate guidance out of France is weak and they scream and yell at local leadership when they do not do things the way they want (even though they do not tell them how they want it),” one reviewer wrote. “Corporate constantly changing leadership at local level,” another review reported.
In September 2015, Reuters reported that American Airlines in Texas sued Zodiac for delays in seat production, causing share prices to drop even further and wiping out nearly a quarter of the company’s value. Instead of pursuing the lawsuit, the airline company signed with B/E Aerospace, one of Zodiac’s competitors.
Then, earlier this month, Bloomberg reported that Zodiac issued its ninth profit warning in two years.
Profits and layoffs may not tell the whole story, insiders say.
According to the August WARN report, Zodiac Human Resources Director Espino wrote that the facility itself isn’t closing, but simply reducing its operations a portion of which are being sent to Mexico, according to Espino. In the previous interview with the Sun, she didn’t say which part of the production process the Chihuahua facility is handling.
At the end of August, a Zodiac press release celebrated the 10-year anniversary of its Chihuahua plant, which grew from a modest two business units in 2006 to at least 3,000 employees and five plants in nine business units. One of the units includes seat shell manufacturing.
It’s not clear how many more employees Zodiac’s Santa Maria plant plans to cut. Additional phone calls by the Sun placed to Espino weren’t returned before press time.
Staff Writer David Minsky can be reached at dminsky@santamariasun.com.
This article appears in Sep 22-29, 2016.