Boeing drone unit Insitu, which employs about 1,000 people in the Columbia River Gorge and about 500 elsewhere, said Tuesday it is cutting its workforce because of competitive pressures and a falloff in business.
Chief executive Esina Alic announced the news to employees without providing any details on the overall number of people who will be laid off. A person familiar with the details said the workforce will be cut by about 15 percent, which will slash more than 200 jobs.
That’s a major blow to employment in the area around Bingen, Washington, where Insitu is based, and Hood River, Oregon, across the Columbia River. A small cluster of aerospace suppliers has grown up there.
Insitu spokeswoman Jenny Beloy said Alic told employees Tuesday that cutting the workforce was necessary to cope with increased competition in the drone business.
“Our market has become more challenging, and with that we’ve seen an increased need to reduce costs,” Alic said.
Insitu’s catapult-launched ScanEagle drones are used by the military for surveillance in battle zones and by the Coast Guard for maritime surveillance. The company provides both the drone systems and the field operators who deploy them.
One Insitu engineer, who doesn’t expect to be laid off but who spoke on condition of anonymity to protect his job, said Alic, who was appointed CEO only last year, is a good leader. He blamed mismanagement at the level below her for a series of quality issues that has hurt the company’s reputation.
Insitu lost out this spring in a competition to provide the U.S. Army with a new drone scout called the Future Tactical Unmanned Aerial System (FTUAS). In a “fly-off” competition between the contending drones conducted in Utah in November, the engineer said, the Insitu drone crashed repeatedly during the field tests.
“We had flown it only a few times. The configuration wasn’t ready,” the engineer said. “It crashed three times in front of the customer.”
“There are huge quality issues. We are not competitive in pricing,” he added. “We’re losing contracts.”
Spokeswoman Beloy acknowledged the three FTUAS field-test crashes and said the causes “are under review.” She added that Insitu remains focused on “developing the best technology to support our soldiers.”
Andy von Flotow, a co-founder of Insitu, left the company when Boeing bought it in 2008. He later launched Hood Tech on the Oregon side of the river, making camera systems and catapult launchers for ScanEagle with a payroll of more than 100.
Von Flotow said Insitu invented its specific drone niche: a large, long-endurance aircraft of about 50 pounds, featuring high-quality cameras, along with the contractor business model of providing a team of operators to field the drones.
But von Flotow said a lot of competitors have jumped into that niche, which doesn’t require huge investment.
“Insitu invented that business model in the early 2000s,” he said. “Now there’s a whole bunch of me-toos.”
He said various small suppliers in the Gorge area depend upon doing business with Insitu, including Australian firm Orbital UAV, which makes drone engines; Sagetech, which makes transponders for the drones; and Zepher, which builds mechanisms for capturing the drones on return from their missions.
As a result, Insitu has helped reshape a Gorge economy that was once dominated by aluminum smelters, timber mills and agriculture and now is something of a high-tech aerospace incubator. Now all those suppliers will likely be hit by the downturn at Insitu.
“Our own business will probably also shrink,” said von Flotow. “We’ll have to see how deeply.”
d Insitu as an agile young upstart to get a boost in the burgeoning drone field.
Those laid off will get 60-day notices, said Insitu’s Beloy.
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