Sectors

Boeing to Reduce Workforce by June As Part of Cost-Cutting and Reorganization

March 30
9:57 AM 2016

Boeing, the largest aircraft maker announced on Tuesday about reducing its employees to 4,500 by June. The move is part of the cost-cutting effort to keep up with passengers asking less expensive jetliners. Added to that is the drop on orders as clients are cutting back, hesitant to spend billions of dollars with aircraft that will take several years of delivery.

The cutting of jobs will push through even if Boeing has booked numbers of orders and boosted production of its single-aisle and twin-aisle aircraft.  The company is losing market share with competitor Airbus Group SE.

Boeing will cut 1,600 positions in the commercial airplanes division through voluntary layoffs. The rest of the reduction is anticipated to be completed by leaving open positions vacant, said spokesman Doug Alder.  Involuntary layoffs will not include job cuts at hundreds of executive and managerial positions, as reported by Reuters.

The job cuts hold for about 3% of Boeing's workforce comprising of 161,000 employees at the end of last year.  Although the company reported 762 planes delivery last year surpassing its previous forecast, there is also a big decline in new orders as clients from Middle East and Asia are cutting back.

Since December 31, 2015, Boeing's accumulation of orders lies at 5,795, constituting more than seven and a half years of output at the present rate.  As Boeing and Airbus run at full capacity, airlines are being hesitant to spend billions of dollars on aircraft that they will just receive after a few years of waiting, BBC reports.

Last month, Boeing's commercial unit chief executive, Ray Conner said that the company is under pressure build up from different airlines to provide less-expensive jetliners, and has to offer steep price cuts to win deals.  The aircraft manufacturer is reorganizing its commercial unit by integrating its older 747 and 767 jet programs, according to The Wall Street Journal.

"We need enough flexibility to win critical campaigns and still have enough margin to invest in new airplanes and services," Mr. Conner said in an internal message to employees last week.

Boeing has a solar-based target for reducing costs and is also concentrating on enhancing its productivity, manufacturing quality, shrinking inventory and importantly cutting back on business travel.

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