Boeing warns of more cost cutting and possibly layoffs

EVERETT — Leaders of the Boeing Co.’s commercial airplanes division told employees Monday that more job cuts and further cost reductions are needed in 2017 to stay competitive.

The division “will continue working aggressively” to slash expenses next year, Boeing Commercial Airplanes (BCA) leaders said in a message to workers.

That could include layoffs “where needed and in some circumstances,” they said.

No specific target for job cuts has been identified, Boeing spokesman Paul Bergman said.

BCA already has slimmed ranks by 8 percent this year through a mix of buyouts and by not filling empty positions. That includes cutting the number of executives and managers by 10 percent, the outgoing head of BCA, Ray Conner, and his successor, Kevin McAllister, said in the message.

That is nearly 7,000 jobs, based on employment data on the company’s website.

Many of those cuts came in Washington, where BCA is based. Boeing has cut 6,645 jobs in the state since the beginning of the year.

The cost cutting comes in a market “characterized by fewer sales opportunities and tough competition,” Conner and McAllister said.

At the same time, Boeing’s board of directors recently increased shareholder payouts and approved spending up to $14 billion to boost the stock value. They are doing that by buying back shares, reducing the number on the market, thus making each outstanding share worth more.

Earlier this month, the company announced plans to make fewer 777s going forward, which could mean job cuts in Everett, where the airplane is assembled.

The drop in new orders follows several years of spending sprees by airlines around the world. Airlines typically pay a down payment when ordering an airplane and make progress payments along the way ahead of delivery. The largest payment usually comes when an airplane is delivered.

While airplane orders are down, Boeing still plans on boosting overall production in the next few years as it works through a huge backlog.

Conner and McAllister told workers the company must work on “matching employment levels to business and market requirements.”

“Once again, we will accomplish these reductions through a combination of attrition, leaving open positions unfilled where appropriate, and offering a VLO (voluntary lay off) program in early 2017. Where needed and in some circumstances, we may also need to use involuntary layoffs.”

In early January, the company plans to offer workers a buy out — or voluntary layoff — worth one week of pay for each year of service at Boeing, with a cap at 26. It will be a lump sum payment. That is the same offer given to workers this year.

Dan Catchpole: 425-339-3454; dcatchpole@heraldnet.com; Twitter: @dcatchpole.

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