The aircraft maker will lay off 6.7% of its commercial plane workforce by the end of the second quarter because of economic and competitive pressures
With new commercial plane orders plunging amid a global economic crunch, Boeing (BA) plans to cut staff. The jetmaker on Jan. 9 announced that it would eliminate 4,500 jobs, or some 6.7% of its commercial plane workforce this year, many in the second quarter. The company said it was undertaking the cuts—which will include a mix of full-time employees and contractors—to contend with pressures raised by the economic downturn and heightened competitive conditions.
Chicago-based Boeing has a substantial backlog of plane orders—several years' worth—but has been seeing new orders slip. New orders fell to some 662 planes last year, just over half the number ordered in 2007. So far, spokesman Jim Proulx says, the company has seen only a handful of cancellations or deferrals in its 3,700-plane backlog. But he says the economic slide requires "prudent action."
Boeing can churn out some 400 or more planes in a normal year. The carrier produced 441 planes in 2007 and, despite a 57-day strike last fall by machinists, turned out 385 last year. Proulx declined to say how many planes the carrier plans to roll out this year.
Impact on Labor Relations
The layoffs may complicate labor relations already strained by the strike members of the International Association of Machinists & Aerospace Workers undertook last fall. Already, IAM District 751 President Tom Wroblewski is demanding that the company reduce work for contract laborers before full-time staffers. "While Boeing has indicated that many of the announced layoffs will hit non-Boeing labor, our expectation is that Boeing will do the right thing and release the many on-site contractors performing our facilities and maintenance work," the union leader said in a statement. "We believe Boeing has many other options available, and we will push them to retain their valued employees."
Wroblewski added that Boeing has continued to hire. Some 32 production workers were added in recent days, he said. The union has been battling the company's use of outside labor and outsourcing of work to independent companies.
Boeing has not yet detailed which workers will be cut. Local press reports suggest that the cuts will begin in late February and many will hit in the second quarter. Citing internal messages to employees, the Seattle Times reported that Boeing's commercial airplanes unit chief, Scott Carson, called the move "a difficult and painful decision" made necessary by the sharp slowdown in the airline business. "Industries and individuals must prepare for a year of tough challenges," the paper reported Carson as telling employees. "We believe that acting now will allow us to keep employment reductions to a minimum while we adapt to the uncertainties of this economic cycle."
Boeing has been plagued by repeated delays in the production of its much-ballyhooed 787 Dreamliner jet and now expects to deliver the first of those planes in early 2010, some two years late. Before the global downturn, the much-anticipated plane logged hundreds of orders, making it the most coveted new plane ever.