Boeing has begun a cost-cutting exercise that will result in the loss of 4,000 jobs in its commercial airplanes unit by the end of June, the company confirmed Wednesday. Although the company plans to reach that figure through voluntary layoffs and natural attrition, Boeing’s longer term plans call for as much as a 10 percent cut in its workforce in Washington state, resulting in the loss of some 8,000 jobs, according to a report by the Seattle Times referencing a leaked internal company document. The cuts will include hundreds of executives and managers, said Boeing.
“We continue to follow our plan announced last month to make fundamental changes for the long term to win in the market, fund our growth and operate as a healthy business,” said Boeing in a statement. “That involves a combination of non-labor cost savings, supply chain savings, and reduced staffing levels. While there is no employment-reduction target, the more we can control costs as a whole—the less impact there will be to employment.
“Staffing reductions through mid-year, including hundreds of executives and managers, are projected to total approximately 4,000 positions, none of which involve involuntary layoffs. We’ve been able to reduce staffing levels through attrition, leaving open positions unfilled, and voluntary layoffs. We’ll only use involuntary layoffs as a last resort.”
Last month Boeing Commercial Airplanes CEO Ray Conner said that pricing pressure from competitors has severely curtailed Boeing’s ability to maintain profit margins, leaving it with little choice but to pursue a wide-ranging cost-cutting plan. Apart from employee cuts, the plans call for supplier concessions, productivity gains and a cut in travel expenses, overtime and contractor costs, according to the Times report.
Boeing’s main competitor, Airbus, claimed a 57 percent share of the market in terms of unit sales last year, and some 63 percent of all orders for single-aisle airplanes. Although Boeing continues to operate from a position of strength in the widebody segment, its 737 Max program has fallen well behind the A320neo in sales count, perhaps most alarmingly for Boeing in the part of the market where the 737 Max 9 competes with the A321neo.