The Strategist

Boeing to Rationalize Its Washington Division

03/30/2016 - 15:48

The Boeing Company intends to cut 4.5 thousand jobs by June. The decision should help accelerate implementation of cost reduction programs amid growing competition from Airbus. The layoffs will concern mainly the commercial division of the company, not just ordinary employees but also managers and senior representatives. As a result, the total number of Boeing employees will be reduced by 2.8%.

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As reported yesterday, Boeing Company is planning to have 4.5 thousand employees reduced by the middle of the year under the cost reduction program. About 4 thousand jobs will be cut in the division for the production of commercial aircraft. Another 500 jobs - in the division, which is engaged in conducting flight and laboratory tests. The programme mostly aims at Boeing’s facilities in Washington state. As noted in the Boeing, 1,6 - 4.5 thousand people will be cut as part of a voluntary dismissal program. The remaining 2.4 thousand jobs will be freed after retiring of some of employees or will simply remain vacant.

The press service of Boeing emphasized that the "reduction in compulsory basis will be used only in the most extreme cases." The layoffs will concern not only ordinary employees, but also dozens of managers and senior representatives of several commercial units. As a result, the total staff of the company, which numbered 161 thousand men on December 31, 2015, will be reduced to 2.8%. The cost reduction program also stipulates revision of contracts with suppliers, increase in productivity, quality of work, and so on against the background of fierce competition with Airbus, and Boeing’s share reduction in commercial aircraft market.

Recall that Airbus beat Boeing on the number of aircraft ordered and delivered in 2015 (1036 against 768 respectively); yet the decline in orders was significant for both companies. At the end of 2015, Boeing received a record revenue - $ 96.1 billion, but the company's profit fell to 13%, to $ 7.74 billion. At the end of January this year, Boeing shares have fallen by 10% after publication of a pessimistic outlook for sales and profits.