BA Boeing Co

By Doug Cameron 

Boeing Co. is cutting workers at its fastest clip in more than a decade.

The aerospace giant shed more than 6,000 staff during the first half of the year, some 4% of its workforce through a mix of attrition, buyouts and layoffs, most of them at its big jetliner plants in Washington state.

Boeing has said it needs to improve efficiency and rely on more factory automation to build the next generation of aircraft as it works through an order book of more than 5,700 jets.

Executives said the cost-cutting drive was crucial to remain competitive with Airbus SE. Boeing's European rival has in recent years claimed more than half of the market for single-aisle workhorse jets, tilting the balance of what had been an evenly balanced duopoly for two decades.

The job cuts at the world's largest airline manufacturer by revenue are most pronounced in Washington state, home to two of its three commercial jet-assembly plants. Washington's employment department said Boeing has issued layoff notices to 1,251 staff in the state this year, with the latest batch of cuts starting on July 21.

Over the past four years, Boeing has reduced its Seattle-area workforce by more than 20,000, according to company records.

The scale of the cuts have drawn fire from Boeing unions, which are concerned the company is diluting its engineering skills at a time when it is boosting aircraft production and transitioning to new models of two of its best-selling jets.

While focused on the Seattle area, the job cuts also have extended to the plant in North Charleston, S.C., where President Donald Trump attended the February rollout of the new 787-10 Dreamliner, extolling plans to boost U.S. manufacturing jobs.

Four months later, Boeing said it planned to lay off around 200 workers at the facility, adding to 700 who had taken buyouts. Employment at Boeing's Charleston-area facilities dropped to around 7,300 at the end of June from a peak of over 8,000 at the end of 2015.

Richard Aboulafia, an aerospace consultant at Teal Group, said Boeing's warming relationship with Mr. Trump after a rocky start over the Air Force One replacement program helped provide some political cover for the job cuts. In December, Mr. Trump called for the cancellation of the order for a new Air Force One from Boeing, citing the cost.

The analyst also questioned Boeing's contention that cuts are needed to keep pace with Airbus. "Competition is pretty much the same as it's been for years," said Mr. Aboulafia, who views them as an opportunistic move to boost profits and stoke the share buybacks that have propelled Boeing shares to record highs.

The stock is up about 36% so far this year, valuing the company at close to $129 billion. Boeing reports second quarter earnings on July 26.

Over 1,800 Boeing employees have accepted voluntary buyouts so far this year, with 3,000 taking that route in 2016, according to its two largest unions.

Boeing declined to comment on the unions' numbers and said its work to increase efficiency is continuing. "Employment reductions will come through a combination of attrition, leaving open positions unfilled, voluntary layoff program and in some cases, involuntary layoffs," the company said.

Boeing hasn't detailed how many more jobs it may cut, but the existing pace has prompted local Seattle-area officials in March to seek an emergency grant from the Labor Department, said Dot Fallihee, interim chief executive of the Workforce Development Council of Seattle-King County. Ms. Fallihee said it would share over $300,000 with neighboring Snohomish County to support around 1,000 displaced Boeing workers with benefits such as retraining.

The job cuts have led some critics to question tax breaks the company is receiving from Washington state as it moves some work elsewhere in the U.S. and prepares to open a new center in China to complete work on jetliners destined for that market.

However, the congressman representing the area housing Boeing's big plants said the move into China reflected its status as a multinational company, even if it is the state's largest employer. "Aerospace is bigger than Boeing," said Rep. Rick Larsen (D., Wash.), noting the state is home to 1,800 aerospace suppliers.

(END) Dow Jones Newswires

July 22, 2017 10:12 ET (14:12 GMT)

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