Parrot moves drone production, sourcing from China to South Korea

European drone group Parrot has made some major announcements while reporting its first-half earnings. As the company strives to reduce its cash consumption amid tepid drone sales, Parrot says it will stop production and component sourcing in China, and reduce its workforce by around 20%.

Parrot, which is focusing its sales efforts on government institutions and armed forces, explains in its earnings report that this client segment is part of a slow-moving administrative structure, faced with an economic slowdown. As a result, the company is capitalizing on three “complementary strategic pillars” to adapt to long sales cycles and reduce its cash requirements. Here’s what Parrot’s plan looks like:

Saying no to China: Parrot, which only makes a small number of drones outside of China for US government and military clients, says it will stop all production and component sourcing in China. This, the company says, is being done to ensure a comprehensive response to the growing stakes involved in terms of sovereignty and cybersecurity. The drone maker has now selected a new manufacturer in South Korea, which is a country that Parrot stresses has put in place an advanced technological and industrial infrastructure over many years. The company further expects to reduce production and quality costs from the switch.

More focus on defense and security: Parrot says its technological roadmap for drones will now focus more on dedicated offerings for defense and security, which it sees as the most buoyant segment. The company has already taken into account the availability and lifecycle of its offering for industrial clients (Anafi Ai), estimated at several years, to focus its capacity for innovation on drones for defense and security applications.

Workforce reduction in Pix4D: Parrot says its Pix4D photogrammetry business is now in a transition phase following a period of major investment. Now, the company only needs to support the latest generations of solutions and complementary equipment while reducing the sales of legacy products. As such, Parrot has planned a reduction in the resources that were allocated to its photogrammetry software unit. Overall, the company which had 533 employees at the end of June now plans to reduce its workforce by a further 20% before 2023 ends.

You can read the complete first-half earnings report shared by Parrot here:

Read more: DJI discontinues Care Refresh+, launches new drone insurance plan