Springer Aerospace contributed to its own slide into insolvency

Springer Aerospace contributed to its own slide into insolvency

Christopher Grant, the company’s CEO, admits mistakes

The COVID-19 pandemic played a role in Springer Aerospace’s current financial struggles, but it wasn’t the only factor.

The company admits the mistakes that led to its decision last week to seek protection from its creditors under the Companies Creditors Arrangement Act.

“Springer has suffered from high employee turnover in previous months due to, among other things, the departure of employees at a key management level and extended downtime due to parts and inventory shortages,” Christopher Grant, Springer’s chief executive, said in an affidavit filed last week as part of the company’s 385-page filing with the Supreme court in Ontario.

“These workforce issues are relatively recent and coincide with the disruption caused by the COVID-19 shutdowns and Canada’s unusually active post-COVID labor market,” Grant said.

“The COVID-19 pandemic has contributed significantly to Springer’s financial problems. The COVID-19 shutdowns have severely affected aviation and tourism internationally. Many airlines have laid off staff and grounded fleets.”

“As a result of reduced aircraft traffic, Springer’s customers did not demand the same level of aircraft maintenance, repair and overhaul services or aircraft painting services.”

Grant says his company has tried to fight through the COVID-19 shutdowns and keep its workforce on the job so as not to lose highly skilled and highly valued employees.

“I believed that aviation and tourism would pick up, and I was concerned that Springer would not be able to attract and hire skilled workers to move to Northern Ontario in the future if we lay off our staff during COVID-19.”

Springer has about 100 non-union workers.

They contain:

  • 50 engineers
  • 25 office staff
  • 10 managers
  • about 15 independent contractors

Almost all of Springer’s employees live in or around the Echo Bay area.

Non-administrators are usually skilled tradesmen and engineers, many of whom have mandatory certifications.

In his affidavit, Grant talks about a major expansion Springer undertook two years ago, including a $3 million hangar capable of housing two Boeing 737s.

“While the COVID-19 shutdowns have ended, they have exacerbated some of the operational issues Springer was facing.”

“Prior to the COVID-19 pandemic, Springer had expanded its business and was able to increase top-line revenue. However, due to the timing of the COVID-19 pandemic and the effective shutdown of the Canadian economy, the applicants were unable to implement the expansion as intended.” with sufficient strategic planning.”

“The efficiency of Springer’s business has suffered,” Grant said.

“In recent months it has become clear to me that Springer does not have the right operational key performance indicators and oversight 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 an appropriate performance management system will bring substantial improvements in productivity and profitability.”

Another mistake, Grant says, was the way Springer acquired the parts needed to maintain and repair the planes,

“Springer historically used a just-in-time system for parts and inventory, which I realized was vulnerable to supply chain disruptions and delivery delays.”

“On the one hand, a just-in-time system avoids the need to stockpile with associated costs and waste.”

“On the other hand, having staff waiting for parts and supplies to continue working is inefficient, unprofitable and hurts morale.”

“Springer’s business is dependent on the continuous supply of goods and services, including propane, paints and jet fuel.”

“Delays and shortages of parts and supplies were largely due to global pandemic circumstances beyond Springer’s control. However, due to cash flow pressures, Springer also had to postpone purchases to stretch available cash flow.”

“In reviewing Springer’s performance, I found that employee downtime and perceived shortages of parts and materials caused problems with employee morale and led to high levels of turnover within the organization.”

“Staff turnover was not limited to skilled hangar workers, claimants also lost key members of her management team,” says Grant.

Springer has been granted CCAA bankruptcy protection, preventing any legal action against the company for the time being.

The firm received $1.5 million in debtor-in-possession financing to continue operations and undergo restructuring.

Springer’s largest liability is to Caisse Desjardins Ontario Credit Union Inc., which is seeking more than $5.7 million.

As SooToday As announced today, Springer has retained a chief restructuring officer from New York who will hold an in-person town hall meeting with 100 employees on Tuesday.

Additional SooToday coverage of this story will be posted sometime over the weekend.

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