Boeing Cutting Jobs In Effort To Save Money, Nearly 10 Percent Of Workforce Could Be Eliminated By Year’s End

Boeing is cutting jobs by at least 4,000 before the beginning of summer. While CEO Ray Conner initially announced several weeks ago that jobs would be eliminated, he was not specific about the number.

As reported by the Seattle Times, Boeing issued a statement on Tuesday that indicated 4,000 jobs will be cut by June. However, there is some indication that even more job cuts may be coming and the final number may be closer to 8,000, or 10 percent of Boeing’s overall workforce.

Boeing said the 4,000 number will include many executives as well as managers, a buyout package for roughly 1,600 workers, and employees that simply leave the company.

“We’re going to start at the executive level and at the management teams. And then we’re going to look at attrition and we’re going to look at voluntary layoffs,” Conner said.

Boeing’s plan for cutting jobs is simply a cost-saving measure, which also includes lowering supplier costs, boosting productivity, and reducing inventory. The airplane company is also making cuts in travel, overtime, services, and contractor expenses.

Executives believe the cost-saving initiative will lower the company’s expenses by “billions of dollars” before the end of the year. However, they warned that if the savings are not enough, additional job cuts will also come in 2016 through involuntary layoffs.

“The more we reduce non-labor costs, the less impact there will be to jobs,” said Sean McCormack, the vice president of communications for Boeing Commercial Airplanes.

Managers at Boeing’s Test and Evaluation division near Seattle, Washington, recently received a document outlining the job cuts and what to expect. The guidance communication indicated a workforce reduction of 10 percent, approximately 570 jobs, in the unit before the end of 2016. This is on top of the already planned 4,000 cuts in other areas of the airplane producer.

The announcement of job cuts comes at a time when Boeing has taken in a record number of aircraft orders and is boosting production of its single-aisle and twin-aisle jets. Nonetheless, Airbus Group SE, the company’s strongest competitor, is gaining market share.

During a nonpublic webcast last month to all Commercial Airplane employees, Conner announced the company is in desperate need to lower costs and ultimately airplane pricing due to intense competition from Airbus.

“Their biggest weapon that they’re using in the competitions today is price,” Conner told employees. “They are attacking us with price in every single campaign. And as a result of that, you know, we’re being pushed to the wall.”

Experts say cutting costs and increasing productivity will certainly help the company, but only over the long term. According to Adam Pilarski of aviation consultancy firm Avitas, cost-saving measures take years to show up on a company’s bottom line, especially one as large as Boeing. He predicts cutting additional jobs will likely happen this year.

“The only way you quickly can reduce costs is by laying people off,” Pilarski said. “There’s no magic about it.”

The Boeing job cuts will likely include older, highly-trained blue-collar workers. Earlier this month, a buyout was offered, and more than 1,000 machinists applied. Still, Boeing may reject many of them because they have skills that cannot be easily replaced.

Some units of the company may not even notice the job cuts. Beverly Wyse, Boeing’s South Carolina vice president, said employment in her division is expected to remain unchanged, as no layoffs are anticipated.

At the beginning of 2016, the jet manufacturer employed 83,500 workers in its commercial business, with 79,200 of those jobs in Washington state alone. The 4,000 Boeing job cuts gets the company halfway to 10 percent, but more may be needed if they don’t get the cost savings they hope for by year’s end.

[Photo by Stephen Brashear/Getty Images]