Boeing plans to cut up to 8,000 jobs this year

Mar 30, 2016, 2:55 PM EDT
(Source: FTU Center for International Development/flickr)
(Source: FTU Center for International Development/flickr)

Boeing plans to cut up to 8,000 jobs this year at its commercial airplane division.

The Seattle Times reports:

Since Boeing Commercial Airplanes CEO Ray Conner announced a drive to cut the workforce six weeks ago, his team has taken steps expected to eliminate 4,000 jobs by June — and that may be only halfway towards the total cuts this year. An internal Boeing document obtained by the Seattle Times reveals that at least one company unit is targeting a 10 percent workforce reduction overall. nd people with knowledge of what’s planned say that’s roughly the percentage of jobs expected to be cut statewide. That would translate to as many as 8,000 jobs being eliminated. Asked about the plans, Boeing said Tuesday the initial jobs eliminated include “hundreds of executives and managers” and that the 4,000 figure will be achieved through normal attrition and a voluntary buyout package for about 1,600 employees.

Reuters notes:

"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." The job reductions are part of a broad cost-cutting drive at the Chicago-based aerospace and defense company. Boeing is enjoying the biggest peacetime boom in its 100-year history and increasing jetliner output to historic levels. But it is using fewer workers than in the past, and cutting other costs as part of an effort to compete with Airbus for sales. 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. 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.

24/7 Wall Street writes:

The layoffs would be voluntary, combined with leaving positions unfilled. While the move may just be strictly cost-cutting due to negative conditions, it also may indicate a simple shift of resources towards its Defense, Space and Security (BDS) division in the near future. Evidence suggests the latter is probably the case, and that there is no serious trouble at Boeing. Since 2013, Boeing steadily has increased its research and development (R&D) spending in the Commercial Airplanes department. That spending has grown 30% to $2.34 billion since 2013 on the back of new programs for improved models. R&D for BDS on the other hand has dropped 19% to $986 million, its lowest level since 2008.