Eclipse supplier sues over payment dispute

November 20, 2007

Eclipse supplier sues over payment dispute

By AOPA ePublishing staff

Hampson Aerospace, a subsidiary of U.K.-based Hampson Group, has filed a lawsuit against Eclipse Aviation, alleging nonpayment for tail sections supplied for the Eclipse 500 jet.

Hampson, which is manufacturing the tail components at its Grand Prairie, Texas, plant, declined to comment on the lawsuit. But in a Nov. 20 interview, Eclipse CEO Vern Raburn said that the lawsuit fails to account for quality and delivery problems on Hampson's part.

"On both sides of the coin there have been problems," Raburn said. "We've had trouble getting the production rate to where we want it to be, and that's caused a lot of pain for some of our vendors. In the case of Hampson, what they have neglected to acknowledge is that they've had some tremendous quality problems and significant delivery problems that are one of the issues behind us not getting to the rate we wanted."

Raburn added that Eclipse has paid Hampson millions of dollars since the beginning of the year and deliveries have not been interrupted by the lawsuit. Although Raburn could not comment on the exact dollar amount at stake, he did say that it was "hundreds of millions of dollars less" than the $380 million suggested by some media reports.

The companies are continuing to discuss their differences, but it is not yet clear whether they will be able to reach agreement or whether the relationship will continue long term.

A disruption in the relationship with Hampson, or any key vendor, could have serious consequences for Eclipse's manufacturing and delivery schedule because the company has been moving toward a just-in-time delivery system that keeps inventory at a minimum.

"That's one of the ways we're able to price the Eclipse the way we are, because we don't have huge multimillion dollar inventories we have to pay for," Raburn said.

November 20, 2007