(Dominick Gates) 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.
And 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.
The workforce reduction is part of a major cost-saving push that also involves squeezing supplier costs, increasing productivity, shrinking inventory and cutting travel, overtime, services and contractor expenses — an effort that Boeing said “involves taking out billions of dollars in cost by the end of 2016.”
If enough savings cannot be found elsewhere and more job cuts are required, layoffs would come later in the year, Boeing said.
Boeing Commercial Airplanes (BCA) vice president of communications Sean McCormacksaid Tuesday that “our targets are dollar-based.”
“The more we reduce non-labor costs, the less impact there will be to jobs,” he said.
One Boeing unit in the Puget Sound area — the Test & Evaluation division that conducts flight, ground and lab tests — recently outlined very precise job-cut targets in an internal guidance document telling managers what to expect.
The workforce reduction is part of a major cost-saving push that also involves squeezing supplier costs, increasing productivity, shrinking inventory and cutting travel, overtime, services and contractor expenses — an effort that Boeing said “involves taking out billions of dollars in cost by the end of 2016.”
If enough savings cannot be found elsewhere and more job cuts are required, layoffs would come later in the year, Boeing said.
Boeing Commercial Airplanes (BCA) vice president of communications Sean McCormacksaid Tuesday that “our targets are dollar-based.”
“The more we reduce non-labor costs, the less impact there will be to jobs,” he said.
One Boeing unit in the Puget Sound area — the Test & Evaluation division that conducts flight, ground and lab tests — recently outlined very precise job-cut targets in an internal guidance document telling managers what to expect.
It begins: “We anticipate the need to reduce staffing levels about 10 percent before the end of the year.”
BCA chief executive Ray Conner first announced that job cuts were coming last month in an internal webcast to all Commercial Airplanes employees, a precise account of which has not previously been made public.
According to a Boeing transcript of that webcast, Conner said the company needed to drastically reduce costs — and thus airplane pricing — because of fierce sales 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.”
Danger for Boeing
Adam Pilarksi, senior vice president with Chantilly, Va.-based aviation consultancy Avitas, said saving billions of dollars through cutting supplier costs and increasing productivity can only be a long-term goal.
“In a few years, yes, things can change. By the end of the year, are you kidding me?” he said. “The only way you quickly can reduce costs is by laying people off. There’s no magic about it.”
But Pilarski said there is a danger for Boeing in cutting too many jobs, especially as it plans to match Airbus by revving up 737 production to 57 jets per month and 787 Dreamliner production to 14 jets per month.
“I cannot see how you cut employment 10 percent and keep production levels increasing,” Pilarski said. “The two don’t go together. Something has to give.”
Many older, highly experienced blue-collar workers will be leaving the company as part of the cuts.
A person familiar with the figures said more than 1,000 Machinists applied for the buyout when it was offered this month, though Boeing may reject some of those because they have skills that cannot be let go.
The severance package, designed to appeal to those already intending to retire soon, advances full pension eligibility and also offers a week of pay for every year of service up to a maximum of 26 weeks.
Jon Holden, District 751 president of the International Association of Machinists (IAM) union, expressed surprise when informed of the potential scale of the job cuts.
“We have not been notified of these types of reduction numbers,” Holden said.
No comments:
Post a Comment