Tuesday, December 20, 2016

Boeing offers buyouts and pledges 'aggressive' spending cuts in 2017

Boeing Commercial Airplanes executives vowed to continue to "aggressively" cut spending in 2017, announcing worker buyouts on Monday and warning layoffs may follow.

Citing fewer passenger jet sales and tougher competition, the Chicago-based jet manufacturer warned workers and suppliers that it will continue cutting non-labor costs as well.

Boeing Vice Chairman Ray Conner and Kevin McAllister, the new CEO of Boeing Commercial Airplanes, delivered the sobering message to manufacturing employees and managers one week before Christmas.

"Further employment reductions will be necessary and will continue to come from a combination of attrition, leaving open positions unfilled where appropriate and offering a voluntary layoff program in early 2017," Conner and McAllister wrote in a memo. "Involuntary layoffs may occur in some instances. In 2017, we will continue to focus efforts on matching employment levels to business and market requirements."

"We believe it is important to let you know the situation up front so you are aware as you make plans and decisions for the coming year," the executives added, saying the measures were needed to boost Boeing's overall competitiveness.

Boeing will launch the new buyout round in January, the executives said. They did not say how many workers they hope will take the offer, which spokesman Paul Bergman said is the same package offered in the 2016 voluntary layoffs.

"Employees who participate in the voluntary layoff program will receive a lump sum payment equal to one week of pay for each year they worked at Boeing, up to a maximum of 26 weeks," he said.

The spending and job cuts cap a year in which Boeing Commercial airplanes significantly reduced its workforce and spending in the Puget Sound region, the Boeing executives said. They said they cut management ranks by 10 percent, without giving a precise number, and described a previously undisclosed freeze on discretionary travel affecting all BCA employees.

Boeing last week announced a 30 percent increase in the quarterly dividend payout to shareholders next year.

The new cuts were widely expected by aerospace analysts after Boeing last week announced a production rate cut for its 777 jets, which are made in its Everett factory complex.

Since the Washington state Legislature approved $5.7 billion in tax breaks for Boeing in 2013, employment data shows Boeing now employs 9,923 fewer workers here — a 13 percent drop.

Boeing employed 72,593 people as of Nov. 24, down from 83,295 on Oct. 31, 2013.

(Andrew McIntosh - Puget Sound Business Journal)

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