GippsAero has restructured its operations to "sharpen its focus on sales and support of its core product, the GA8 Airvan."
The restructure will means the loss of about 40 jobs at the Latrobe Valley plant.
According to the company, the restructure will involve "cost reductions through the consolidation of working groups and will create a stronger unified organization ... to take full advantage of the exciting opportunities which face the general aviation industry."
Corporate parent Mahindra Aerospace has reaffirmed its support for GippsAero and will continue with ongoing investments in organizational improvements and "building momentum to realize the full potential of the GA8 and GA10, and adding additional aircraft such as the GA18 to the portfolio."
Mahindra has made significant investment at Latrobe Regional Airport and is thought to be working closely with local, state and federal governments to expand the GippsAero production facility.
"It is always distressing for the workforce and their families when these situations occur," said Victorian Minister responsible for the aviation industry, Gordon Rich-Phillips.
"The Australian manufacturing sector is subject to global pressures due to the high Australian dollar and, as a result, is undergoing significant structural change.The Government understands that since the purchase of the business in 2009 by Indian conglomerate Mahindra Group, the workforce has grown by 80 jobs.
"We have been assured that GippsAero will retain a workforce of up to 100 staff, mostly in the Latrobe Valley.
"Since coming to Government the Coalition has provided a range of support, including upgrades to Latrobe Regional Airport to assist Gipps Aero to maintain and grow its existing business and new product lines. The previous Government also allocated grant funding to the company. The Coalition will continue to work with GippsAero on their product development and export opportunities.
"The Department of State Development, Business and Innovation will work closely with the company to assist affected employees in seeking new employment opportunities."
Rich-Phillips said the Victorian government was committed to the development of aviation skills in Victoria and has released the National Aviation Services Precinct blueprint to create an aviation centre of excellence in the state. The Victorian Coalition Government announced a $20 million funding allocation for the sector in the 2010/11 budget.