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Boeing’s commercial aircraft division may cut up to 8,000 jobs, or about 10% of its workforce, by the end of the year, a move that could save $1 billion in costs as the company faces fierce competition from Airbus.
About 4,000 jobs would be cut by mid-year and, according to Reuters, Boeing’s goal is to cut employment by 10%. The commercial airplane unit has about 80,000 employees.
Boeing said the 8,000 figure is hypothetical. “There is no employment reduction target,” a spokesman told Reuters. “The more we can control costs as a whole, the less impact there will be to employment.”
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The cuts will start at the managerial and executive levels and other reductions will be achieved through normal attrition and a voluntary buyout package for about 1,600 employees, according to Boeing.
The layoffs are part of a cost-cutting drive at Boeing, which is also seeking to lower supplier costs, increase productivity, shrink inventory and cut travel, overtime, services and contractor expenses.
A reduction of 8,000 jobs, including managers and executives, could save the company $1 billion in labor costs, said Peter Arment, an analyst at Sterne Agee CRT.
Boeing Commercial Airplanes CEO Ray Conner first announced that job cuts were coming last month in an internal webcast, citing the threat from Airbus.
““Their biggest weapon that they’re using in the competitions today is price,” he said. “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.”
Conner said the competition between Airbus’ A320 jets and Boeing’s 737 jets was particularly significant because “the 737 is the biggest contributor to the earnings of the Boeing Company.”
The layoff plans caught Boeing’s unions by surprise. “We have not been notified of these types of reduction numbers,” said Jon Holden, president of the International Association of Machinists District 751.
Adam Pilarksi, senior vice president with aviation consultancy Avitas, said there is a danger for Boeing in cutting too many jobs especially as it plans to match Airbus’ production.
“I cannot see how you cut employment 10 percent and keep production levels increasing,” he told the Seattle Times. “The two don’t go together. Something has to give.”
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