Springer Aerospace filed for bankruptcy
Springer Aerospace filed for bankruptcy
Christopher Grant, the company’s chief executive, admits mistakes were made
The COVID-19 pandemic played a role at Springer Aerospace current financial strugglesbut it was not the only factor.
The company admits that mistakes were made before it decision last week to seek protection from his creditors under the Companies Creditors’ Organization Act.
“Springer has experienced significant employee turnover in recent months, including the departure of key management personnel, and extended downtime due to parts and supplies shortages,” Springer CEO Christopher Grant said. he said in an affidavit filed last week as part of the company’s 385-page application to the Ontario Superior Court of Justice.
“These workforce-related issues are relatively recent and coincide with the shutdowns due to COVID-19 and the post-COVID disruption of Canada’s unusually active labor market,” Grant said.
“The COVID-19 pandemic contributed significantly to Springer’s financial challenges. The aviation and travel industry was impacted internationally by the shutdown of COVID-19. Many airlines laid off staff and ground fleets.”
“Accordingly, due to the reduction in aircraft operations, Springer’s customers did not require the same level of aircraft maintenance, repair and overhaul services or aircraft painting services.”
Grant says his company tried to soldier on through the COVID-19 disruptions, keeping its employees on the job so as not to lose highly skilled and valuable workers.
“I believed that the aviation and travel industries would recover and I was concerned that Springer would not be able to attract and hire skilled workers to locate to Northern Ontario in the future if we lay off our workers during COVID-19.”
Springer has about 100 non-union employees.
- 50 engineers
- 25 office workers
- 10 directors
- About 15 independent contractors
Almost all of Springer’s employees live in or around the Echo Bay area.
Non-administrators tend to be skilled tradesmen and engineers, many with mandatory certifications.
In his affidavit, Grant talks about Springer’s major expansion two years ago, including a $3 million hangar capable of supporting two Boeing 737s.
“While the COVID-19 disruptions are over, they exacerbated some of the operational issues Springer was experiencing.”
“Prior to COVID-19, Springer expanded its business and managed to increase its primary revenue. However, given the timing of COVID-19 and the effective shutdown of the Canadian economy, the applicants were unable to implement the expansion as planned with sufficient strategic planning.”
“Springer’s business efficiency has suffered,” Grant said.
“It has become apparent in recent months that Springer does not have adequate performance indicators and monitoring tools to measure the company’s overall financial performance or compare Springer’s performance to other businesses in the same sector.”
“I believe that implementing a proper performance management system will lead to significant improvements in productivity and profitability.”
Another mistake, Grant says, was the way Springer obtained parts needed for aircraft maintenance and upgrades.
“Springer has historically used a just-in-time system for parts and inventory, which I have realized is vulnerable to supply chain disruptions and shipping delays.”
“On the one hand, the just-in-time system avoids the need to store inventory, with the associated cost and waste.”
“On the other hand, workers waiting for parts and supplies to keep working are inefficient, unprofitable and detrimental to morale.”
“Springer’s business is dependent on an uninterrupted supply of goods and services, including propane, paint and fuel oil.”
“Delays and shortages of parts and supplies were largely caused by the global pandemic beyond Springer’s control. However, due to cash flow pressures, Springer has also had to delay purchases to stretch available cash flow.”
“In reviewing Springer’s performance, I learned that employee downtime and perceived parts and material shortages were causing problems with employee morale and contributing to the organization’s high turnover levels.”
“The staff turnover was not limited to the skilled workers who worked in the hangars, applicants also lost members of the management team,” says Grant.
Springer has been granted bankruptcy protection by CCAA, preventing any legal action against the company for now.
The company has secured $1.5 million in debtor-in-possession financing for continued operations and restructuring.
Springer’s largest obligation is with Caisse Desjardins Ontario Credit Union Inc., which is seeking more than $5.7 million.
Ass SooToday announced this morning that Springer has hired a New York City restructuring manager who will face off. town hall meeting with its 100 employees on Tuesday.
More SooToday coverage of this story will be posted throughout the weekend.
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