Paris - Eurocopter announced Oct. 22 a company plan to slash 200 million euros ($300 million) of costs, boost productivity and continue to invest in future products in response to a plunge in the civil helicopter market.
The company, a division of EADS, will avoid compulsory layoffs but will look for cost reductions under the plan, dubbed Shape.
"Eurocopter has to save money in the short term in order to get through the crisis period," the company said in a statement.
The cost reductions were intended to raise profitability and would include Eurocopter's contribution to the Future EADS cost-cutting program, the company said.
An analyst at a French brokerage said the market response was negative because although the statement confirmed previous news reports, it was not clear how much of the 200 million euros in reductions would flow to EADS and how much would go to boost Eurocopter's margins.
A reduction of inventories and staff redeployments, while fostering competencies and motivation, were part of the short-term cost-saving drive. For the medium and long term, the company looks to improve internal processes to provide sustainable revenues.
The company would also continue to invest in new products to maintain long term competitiveness.
"Even in times of crisis, Eurocopter will continue to increase budgets for the development of new products and services," the company said. Research and development spending rose 40 percent in 2008 and 25 percent in 2009.
Eurocopter would go ahead with development of the X4 civil helicopter to replace the Dauphin, business daily Les Echos reported.
"The Shape program is much more than just a simple cost-reduction program," Chief Executive Lutz Bertling said in the statement. "With Shape, Eurocopter will have the opportunity to make the essential profits and necessary cash available to continue to invest in its future."
The market analyst pointed out that a Gallup survey commissioned by EADS showed 80 percent of employee respondents were "demotivated," including most of those employed in France. The survey, which had been commissioned as part of the company's 10th anniversary, showed a deep disenchantment within EADS' ranks. That contrasted with a previous sense of "dedication" among personnel to the company, the analyst said.
Chief Executive Louis Gallois is taking the poll findings seriously, Les Echos reported. The French government plucked Gallois from the top post at Aerospatiale in the 1990s to head the troubled SNCF rail operator, mainly because of his ability to manage a work force. After 10 years, he returned to the aerospace industry as CEO of EADS.
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