Boeing plans to cut up to 8,000
jobs this year at its commercial airplane division, according to two people
familiar with the matter, a move that could slash $1 billion in costs and help
it battle for sales against European rival Airbus.
Boeing acknowledged plans to cut
about 4,000 jobs in its commercial airplanes division by mid-year, and another
550 jobs in a unit that conducts flight and lab testing.
Sources said the company's broad
goal is to cut jobs by 10 percent at its commercial airplane unit, which has
about 80,000 employees.
Boeing said the 8,000 figure is
hypothetical and that it does not have a specific goal for job cuts.
"There is no employment
reduction target," spokesman Doug Alder said. "The more we can
control costs as a whole, the less impact there will be to employment."
Boeing said the job reductions
are part of a broad cost-cutting drive to keep the Chicago-based aerospace and
defense company competitive. But Boeing's stock posted the biggest decline in
the Dow Jones Industrial Average on Wednesday, falling 1.88 percent to $128.58.
Boeing is enjoying the biggest
peacetime boom in its 100-year history, increasing jetliner output to historic
levels.
But it is using fewer workers
than in the past, and cutting other costs to compete with Airbus.
The savings are necessary to
"win in the market, fund our growth and operate as a healthy
business," Ray Conner, chief executive of the airplane business, told
employees last month.
Boeing booked 70 new plane orders
through February compared with 18 for Airbus, but the tally included 40
discounted 737s to United Airlines.
Investors said they saw the large
job cuts as a harried response to a slowing business cycle and tough
competition from Airbus, rather than a part of an orderly plan to adjust labor
to match output.
"It sounds reactive, not
proactive," said a fund manager with a large stake in Boeing.
Some analysts said investors
unfairly penalized Boeing for adjusting employment to reality. Boeing has been
upfront about plans to ship fewer planes this year as it slows the 747 line and
brings its 737 MAX into production. It will cut 777 production by 15 percent in
2017. But it also has taken steps to boost output of 737s and 787s in later
years, and its assembly lines are more efficient thanks in part to robots.
"They're building a better
product and building it faster," said Howard Rubel, an analyst at
Jefferies. "Some of that success means you have to cut jobs."
A reduction of 8,000 jobs,
including managers and executives, could save the company $1 billion in labor
costs, said Peter Arment, analyst at Sterne Agee CRT. The airplane unit
"is targeting 'billions' of cost reduction by year-end," which will
help the company remain competitive, he said.
The 4,000 job cuts in the
commercial airplanes division by mid-year will include about 1,600 through
voluntary layoffs and 2,400 by leaving open positions unfilled, Alder said. The
company doesn't plan involuntary layoffs, he added.
The numbers disclosed caught the
company's unions by surprise. "We have not been notified of these types of
reduction numbers," said Jon Holden, president of the International
Association of Machinists District 751. The union said more than 1,000 members
applied for voluntary layoffs.
Boeing's other major union, the
Society of Professional Engineering Employees in Aerospace, said some members
had been told they might be eligible for buyouts but none were approved.
Both unions said job reductions
showed the need for Washington state lawmakers to enact measures to ensure
Boeing maintains or increases its workforce in the state in exchange for $8.7
billion in tax incentives granted in 2013.
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