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<< Previous   of   Next >>   ADVERTISEMENT   CONTACT THE HERALD Mike Benbow, Business Editor benbow@heraldnet.com   Published: Saturday, January 10, 2009 4,500 losing jobs at Boeing Company silent on number it will lay off in Everett By Michelle Dunlop Herald Writer EVERETT -- The Boeing Co.'s hiring spree came to an end Friday when the company announced it would cut 4,500 positions by the end of April. "We are taking prudent actions to make sure Boeing remains well-positioned in today's difficult economic environment," said Scott Carson, president of Boeing Commercial Airplanes. The announcement came a day after the company revealed its 2008 jet orders dropped nearly 50 percent from the previous year. Boeing also delivered nearly 100 fewer aircraft than it initially had planned because of a 57-day Machinists strike and parts shortages. Despite the layoffs, the company intends to maintain its production pace, Carson said in a memo to employees. Boeing plans to issue 60-day layoff notices Feb. 20, setting a time frame for an April departure for many workers. Company spokesman Jim Proulx declined to give the number of jobs that will be lost at Boeing's Everett plant. But Boeing will lay off contract and union workers, primarily those not directly associated with aircraft production. More layoffs to come? The job cuts come as Boeing tries to get its delayed 787 Dreamliner into flight testing this spring. Late last year, the company also announced delays to its 777 Freighter and 747-8 programs. However, Paul Nisbet, an analyst with JSA Research, wasn't surprised by Boeing's announcement. "This is something that happens when production begins to level off," he said. "You always need more labor when you're building up." If Boeing is able to get its 787 Dreamliner into flight testing this spring, the company's demand for research and development will decrease dramatically, even with the 747-8 still in the works, Nisbet said. As Boeing works out production kinks with its 787, the company could make further cuts, Nisbet suggested. The company also could reduce employment again if airlines hand Boeing too many deferrals or order cancellations. Richard Aboulafia, an aviation analyst with Virginia-based Teal Group, also indicated more layoffs may be ahead. "This is likely just the start of it, not just at Boeing, but throughout the industry," Aboulafia said. "We're heading into a down cycle, and how long it lasts really depends on the broader economy. But looking at the (air) traffic numbers … it will be a bit worse than usual." The International Air Transport Association predicted last November that the industry will lose about $2.5 billion in 2009. Both passenger and cargo traffic are expected to decline, by 3 percent and 5 percent respectively, in 2009. Boeing's Proulx said the company still has a strong commercial jet backlog of 3,700 unfilled orders. The company received just seven cancellations in 2008. The aerospace giant, which didn't provide a financial forecast after the third quarter because of the strike, is expected to share its 2008 earnings later this month. Boeing shares declined 34 cents to close Friday at $44.45. Unions question layoffs Boeing employed 67,659 workers in its commercial airplanes division at the end of December. The job cuts will return the division's employment level to its January 2008 level of 63,000. Ray Goforth, executive director of the Society of Professional Engineering Employees in Aerospace, called the layoffs "puzzling" and "counterproductive" in a time when the company is trying to get jet programs back on track. About 23 percent of SPEEA's 20,740 members in the region continue to work 12 hours of overtime weekly, he said. "Unlike previous layoffs where Boeing was responding to downturns in aerospace, these layoffs have no clear business rationale," said Goforth. "The company should staff up to fix the self-inflicted wounds of its outsourcing model, not lay off employees to prop up the stock price." Although the union isn't sure how many of its members will be affected, SPEEA noted that Boeing employs about 2,500 contractors. SPEEA expects Boeing to lay off contract workers before it sheds union members. Local Machinists union president Tom Wroblewski also expressed concerns for his 24,000 members in the Puget Sound area. However, he noted that as recently as Friday, Boeing continued to add Machinists to its payroll. The union will present Boeing with a plan to retain members if any receive layoff notices, Wroblewski said. "We believe Boeing has many other options available, and we will push them to retain their valued employees," Wroblewski said. As Boeing trims its work force, many Machinists and engineering employees are reaching the company's retirement age of 55. More than 20 percent of Machinist union members are eligible to retire already. Roughly 5,900 more will become eligible within the next few years. SPEEA estimates that about one-third of its members will retire within the next nine years. Boeing previously has expressed concern over having a sufficient supply of qualified workers. 'We've had worse times' Boeing's employment reduction comes as Snohomish County's unemployment rate sits at 6.3 percent and threatens to increase, said Donna Thompson, regional labor economist. Boeing wouldn't say how many of the 4,500 jobs facing layoffs will be from its Everett site. Still, the cuts aren't going to help Snohomish County's economy, where 35,600 people work in the aerospace industry. "It will have an effect," Thompson said. "Those people won't have paychecks to spend in fancy restaurants or in retail stores." "We have had worse times," she added. Boeing slashed roughly 30,000 positions -- mostly in the Puget Sound region -- over the course of two years following the terrorist attacks of Sept. 11, 2001. In 2003, the county's unemployment rate hit 7.1 percent. It was at 5.3 percent in September 2001. The county's highest unemployment rate in recent decades: 11.8 percent in 1982 following another downturn in aerospace. "The economy is more fragile than during other layoffs," Thompson said. "It's just getting hit by so many things." Deborah Knutson, president for Economic Development Council of Snohomish County, said her organization plans to team up with other agencies to help laid-off workers, Knutson said. "The company really needs to take care of itself and make sure it stays strong, but at the same time, they are very valuable employees. We want to take care of them and make sure they will stay in this area," she said. Gov. Chris Gregoire said she feels for the affected workers and their families. "The announcement that Boeing plans to lay off part of its work force is sad and disappointing, and yet more evidence of the deepening national recession," Gregoire said in statement. Sen. Patty Murray, D-Wash., said in statement that she will be working with President-elect Barack Obama on an economic recovery plan that helps people who have been laid off and invests in jobs such as those in aerospace. "This is another painful reminder that the recession is hitting home for Washington state families," Murray said. "Boeing is part of the lifeblood of our region, and when Boeing hurts, Washington state hurts." Herald reporter Yoshiaki Nohara and the Associated Press contributed to this report. Reporter Michelle Dunlop: 425-339-3454 or mdunlop@heraldnet.com. READER COMMENTS Be the first to comment. You must be a registered user and verify your e-mail address to post comments to blogs or articles on HeraldNet. To register, click here. 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