Dec. 20, 2016: Boeing yesterday announced a new round of job cuts, hoping that these will come from retirements voluntary buyouts–but it did not rule out involuntary layoffs.
No number was given by Boeing for the workforce reduction.
Just a week ago, LNC predicted more job cuts would be coming at Boeing–and at Airbus.
Boeing’s message to employees is below.
Earlier this year, we committed to competiveness initiatives to better position Boeing Commercial Airplanes in the marketplace. We believe it is important to be accountable to you concerning the 2016 results, and to let you know we will continue these efforts in 2017 so we remain the true industry leader next year and in the future.
The recent 777 rate-reduction announcement is the latest sign that the market is signaling near-term hesitation for twin-aisle aircraft in certain regions. But it also illustrates the dynamic business climate in which we currently operate; an environment characterized by fewer sales opportunities and tough competition.
We continue to follow our plan announced earlier this year to make fundamental changes to win in the market, fund our growth and operate as a healthy business. Teams across Commercial Airplanes have been focusing on the Keys to Winning to improve first-time quality, productivity and safety, and reduce waste. We reduced total employment this year mostly through attrition, not backfilling open positions, and voluntary layoffs (VLOs). We achieved further supply chain savings, sought ways to more efficiently manage use of our facilities and cut discretionary spending, including travel and other non-production costs.
While we have made progress in reducing costs and improving affordability, we will need to do more in 2017. This means we will continue working aggressively across BCA to reduce non-labor costs.
It also means we will need to continue to reduce the size of our workforce next year. By the end of this year, we anticipate a reduction of 8 percent in total BCA employment since January. This includes a 10-percent reduction of executives and managers. In 2017, we will continue to focus efforts on matching employment levels to business and market requirements.
Once again, we will accomplish these reductions through a combination of attrition, leaving open positions unfilled where appropriate, and offering a VLO program in early 2017. Where needed and in some circumstances, we may also need to use involuntary layoffs.
Right now, each BCA organization is analyzing its 2017 budget and staffing plans. The leaders of your respective organizations will share more information on staffing plans and the specific skills offering VLOs or other employment actions soon. 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.
Our product lineup is the best in the industry and we have achieved a healthy backlog that currently sustains us. There are tremendous opportunities ahead. But to successfully compete and win new orders that will fund future product development and growth requires us to achieve much better performance. Continuing the actions to fundamentally improve our overall competitiveness will ensure our future leadership in the marketplace.
The Boeing Company
President & CEO
Boeing Commercial Airplanes
At the same time as all this commercial pressure on margins and sales they increased the dividend paid to shareholders. Way to go Boeing.
And stock buybacks. Disgraceful. “Fund your growth” my @$$.
No bottom to the race to the bottom…:(
Merry Christmas from the Boeing management. How did they end up with too many executives and managers in the first place? I imagine that most of the job losses will be in the state that paid the most to keep jobs there.
Big mistake letting the BA HQ go to Chicago! Scott, isn’t that Renton real estate extremely valuable in the (overheated?) Seattle area market? Could BA not strike now and do a deferred sale on Renton, while getting opening two MAX lines–one in Spokane–and one in Charleston (to keep its unions “honest”)? In my opinion, Washington State should have showered dollars equally on BA to keep its HQ, if not more than on its production facilities! Lastly, is there any way to pull the BA HQ out of Chicago, an expensive, crime-ridden, tax heavy, pension-failing, economy-failing mess of a city?
The Chicago HQ is only a few hundred people to cover the worldwide operations and things like treasury and tax.
Seattle still has the HQ of BCA, with many 1000s employees, at the Longacre the former racetrack in Renton. The various production plants around Seattle arent moving anytime soon.
the Chicago HQ oversee the US employee total of 160K, BCA has 82K of that with 78K of those in Seattle area.
How many in Illinois ( Chicago) ? 736!
But not having the”mother ship” local leaves your ops much more vulnerable to downsizing and/or relocation. Haven’t thousands been relocated by BA out of Seattle in the last few years? Hasn’t Charleston picked up a design center that would have been built almost automatically in the greater Seattle area not too long ago? Much easier to just issue missives from a far away tower –killing/relocating jobs and ops facilities!
The HQ of Boeing Commercial Aircraft is still in Seattle. Your comment doesnt make sense, as Boeing only has about half of its US employees working on commercial aircraft, why wouldnt Boeing the group open a new location elsewhere, Seattle is sort of stuffed full for Boeing Commercial. BTW the BCA design centers are Seattle, Charleston and Long beach.
Old habits die hard
Wide body hesitation, love it.
People going away, how about cuts at the top and their salaries, stock options etc?
“wide body hesitation” . . . yes, the powerpoint rangers in Chicago must be proud
I really wonder about Muilenburg’s leadership.
Here Boeing is saying it needs to reduce cost to become more competitive
Meanwhile, the executives are opening up two new headquarters:
@Pierre, BDS is moving from St Louis into their DC-area facilities that already exist, not building/opening new ones.
Thanks for correcting.
Well if Boeing is trying to reduce overhead then it is still opening one too many in my humble opinion.
All that overhead probably explains why Air Force One costs $4 billion.
” All that overhead probably explains why Air Force One costs $4 billion.’
GROOOAN- Never reportedf in the PRINT press or by most video news iks what was actualy said …. AF-1 PROGRAM.
1) At leasrt two planes
2)Cost of sp;ares, flight test, non Boeing parts and interiors, special comm equipm,ent , EMP hardening, two APU insteadf of one, etc.
3) Boeing may get a few hundred million for a green- flyable airframe, not inclujdiong cost of engines.
4) most of the costs are due to DOL,DOJ, secret service, National security issues, etc
per sde- BA will at best break even nd may well take a direct loss on their portion.
Are Boeing not prime contractors? If they are, they basically buy stuff in start multiplying. “integration” is another word for this financial practice.
“Are Boeing not prime contractors? If they are, ..”
Atthe moment they have a 170 Million contract for determining what/how the various requirem,emnts can be integrated lor need to be in the actual asssembly process. Since no other contract has been lety- calling them prime is a bit premature.
Sit back- relax- watch the blinking lights
or Go to the Airforce and register your view of how things work . .
Also, when I posted earlier on this subject I forgot to mentioned, Air Force One is a money maker for the United States Government. All the national and international press that fly on it have to pay. And those first class seats are not cheap. And since the Secretary of State and the VP are using air travel more, I did read the contract was for three, so they might be replacing at least one B757, too.
@Don S,” BA will at best break even and may well take a direct loss”,pigs may well fly.
UHH GRUBBIE ?? I forgot to mention that your concept of ” prime” contractor rarely applies to govt project. In this case-for AF-1 Program the U.S Air Force would probably be considered a ‘ prime’ contractor.
And NO contract for assembly and delivery has been signed or even fully estimated/costed.
Why not relax- and for accurate information as to status and costs and contracts – delivery dates, number of planes, etc contact the Airforce ?
Thank you- and merry Christmas
Hey SAmm – you said ” …contract for three ..” — please provide source- credible source. If such a contract exists, it will be part of public record and NOT speculation.
For Don: Here is one link mentioning three B747-8 for the new Air Force One. I’ve seen it mentioned elsewhere, no contract though…
Try this today from bloomberg (21 dec) after BA CEO meets with Trump
..” The Pentagon has already budgeted $3.2 billion for research and development, military construction and acquisition of two of the Air Force One planes through fiscal 2021, said Kevin Brancato, the lead government contracts analyst for Bloomberg Government. More money is anticipated in the two years after that.
Boeing 747-8 planes average about $225 million each, he said, which means most of the expenses will go to equipping the planes for presidential use….
Stop press, Dennis has just given Trump his “personal commitment that it’s going to come out at less than 4billion. It’s a bit of a mystery how he can do this,as they are still in the assessment phase and have no production order.
How to promise less than 4 billion? Easy
The beatimngs will continue until morale improves
And as to layoffs
BOEING ANNOUNCES STEEP CUTBACKS Tukwilla Wa (satirewire) – Boeing will reduce its
workforce by an unprecedented 120 percent by the end of 2017, believed to be the first time a
major corporation has laid off more employees than it actually has. Boeing stock soared more than
1 point on the initial news release. The reduction decision, announced Wednesday, came after a
year-long internal review of cost-cutting procedures, said Boeing CEO Dennis Muilenburg
The initial report concluded the company would save $1.2 billion by eliminating 20 percent of its
Employee Reduction Plan From there, saidMuilenburg , “it didn’t take a genius to figure out that
if we cut 40 percent of our workforce, we’d save $2.4 billion, and if we cut 100 percent of our
workforce, we’d save $6 billion. But then we thought, why stop there? Let’s cut another 20
percent and save $7billion.
“We believe in increasing shareholder value, and we believe that by decreasing expenditures, we
enhance our competitive cost position and our bottom line,” he added.
Boeing plans to achieve the 100 percent internal reduction through layoffs, attrition and early
retirement packages. To achieve the 20 percent in external reductions, the company plans to
involuntarily downsize 22,000 non-Boeing employees who presently work for other companies.
“We pretty much picked them out of a hat,” said Muilenburg Among firms Boeing has picked as
“External Reduction Targets,” or ERTs, are; Spirit, AMR Corporation, parent of
American Airlines, Rolls Royce, and Perkins Coie. Boeing’s plan presents a “win-win” for the
company and ERTs, said Muilenburg, as any savings by ERTs would be passed on to Boeing, while
the ERTs themselves would benefit by the increase in stock price that usually accompanies
personnel cutback announcements. “We’re also hoping that since, over the years, we’ve been really
helpful to a lot of companies, they’ll do this for us kind of as a favor,” said Muilenburg.
Legally, pink slips sent out by Boeing would have no standing at ERTs unless those companies agreed. While executives at ERTs declined to comment, employees at those companies said they were
not inclined to cooperate. “This is ridiculous. I don’t work for Boeing. They can’t fire me,” said
Kaili Blackburn, a flight attendant with American Airlines.
Reactions like that, replied Muilenburg “are not very supporting.”
Inspiration for Boeing’s plan came from previous cutback initiatives, said company officials. In
January of 2015, for instance, the company announced it would trim 10,000 jobs over two years.
However, just a year later, Boeing said it had already reached its quota. “We were quite surprised
at the number of employees willing to leave Boeing in such a hurry, and we decided to build on
that,” Muilenburg said.
Analysts credited Muilenburg short-term vision, noting that the announcement had the desired
effect of immediately increasing Boeing share value. However, the long-term ramifications could
be detrimental, said Bear Stearns analyst Beldon McInty. “It’s a little early to tell, but by
eliminating all its employees, Boeing may jeopardize its market position and could, at least
theoretically, cease to exist,” said McInty.Muilenburg, however, urged patience: “To my
knowledge, this hasn’t been done before, so let’s just wait and see what happens.”
See simple –
merry Christmas from Boeing
Boeing told employees Monday there will be more job cuts in the new year. The jetmaker says it needs to reduce costs further in the face of intense competition and a flagging jet sales market.
Dominic GatesBy Dominic Gates
Seattle Times aerospace reporter
After a year when Boeing has relentlessly slashed costs and cut its workforce in Washington by more than 8 percent, there’s more of the same to come in the new year, the leaders of the commercial-airplanes unit told employees in an internal message Monday morning. . . . .
And when this thing comes to fruiting (if it does) then DT will long be gone!
Boeing is just using DTs playbook.
Promises you will do something (tax returns) and then keep delaying it until the issue goes away
Same with conflict of interest (or so he thinks) !
Agree with the larger point that Airbus is more strategic in addressing overhead.
Airbus is consolidating headquarters while Boeing is adding more. Makes no sense. That is why Airbus is winning in the marketplace.
Remuneration of top executives is obscene. The nature of performance related pay is a sop to the quite amazing packages that are routinely paid to all executives. Boeing is a clear illustration of this.
The fundamental decisions re strategy have such a long timeframe that any incumbent will be long gone and not accountable for the business critical decisions that they make when the decisions are eventually expected to bear fruit. Further the underlying performance of the company is directly affected by external forces wholly beyond their control such as the world economy or oil prices.
Their single remit is to increase shareholder value today which means they have limited interest in the longer term health of the business. The only thing that they can do to directly affect their bonus is to reduce controllable cost i.e. Labour cost and artificially drive up the share price by buybacks. It is a perverse system that encourages poor stewardship.
This system has the impact of creating an executive who are completely detached from the company as a whole leading to a breakdown of company values. Do employees feel as committed to a company in this circumstance? I think not.
You look at the compensation committee at Boeing and it is a group of likeminded pigs in the trough. There are no checks or balances against greed. How can it be right that a senior manager is earning $19m per annum when they are wholly reliant on a workforce of highly skilled employees to make it happen. Why are they paid a bonus when their basic remuneration is already substantial. The simple answer is because they can.
Im not especially hanging out with ‘fat cats’, but to me a CEO of a $100 Bill company with 200K employees isnt overpaid with $19 mill a year. There would be many people who run small companies that just invest money rather than are responsible for building and developing commercial airliners, and those people would getting 10x what the head of Boeing gets.
“There would be many people who run small companies that just invest money rather than are responsible for building and developing commercial airliners, and those people would getting 10x what the head of Boeing gets.”
“profit condensation” is IMHO a major problem in this system. profits from those endeavors are unproductive.
IMU there is a direct link between immorality of profits achieved and earnings of the upper crust in that segment.
I am hardly a socialist, you compare the CEO against an even more extreme form of capitalist cash grab. I am making a clear distinction between entrepreneurs and managers. What I am focusing on is the manner by which executive salaries have moved up and away from those within the company in recent years.
The argument is that it enhances corporate performance to pay big. This has never been satisfactorily illustrated. Sure pay for exceptional performance but at the same time hold that person to account and don’t pay such rewards for financial engineering. Do you think recent executives in Boeing have been exceptional? Good solid managers I am sure, not much more than that.
What I wanted to point out was a lot of us have been discussing the issue of buybacks and dividends vs job losses and lack of investment. In this context the executive do the rational thing to enhance their stock options, something that is unlikely to be good for the company in the long run
Job losses are minimal compared to the size of the company, and if you have noticed some lines have slowed considerably. Should they keep paying some people while waiting for the 747 and 777-300 lines to pick up ? Other development programs are winding down, such as KC46 and 737Max
Stock buybacks are just a preferred way of Wall St to return money to shareholders, dividends only matter for a few thesedays. If you dont support share price, raiders will buy the business and cut it up into parts and load them up on debt before re-selling. Not all US businesses can be run like VW is run in Germany
The problem is that you can your engineers, then you start all over again.
Ergo, 787 747 issues are not addressed and monitored.
I remember when Boeing canned their hired contractor in Charlotte because they did not need them for 3 months.
Those contractor were the glue that was holding an all new workforce together and it fell apart
They hired them back.
For 3 lousy months in a 33 billion dollar program.
They indeed are short sighted and lack perspective.
If they were well run in the first place they would not be in this position.
Airbus has apparently finalised their Iranian order for 100 aircraft. I think given the election in the US that Boeing will have to place their 80 plane order in the ‘high risk’ category as it seems a number of Republican leaders here will prioritize teaching Iran some sort of a lesson over keeping our major US airframer in top competitive form with Europe (could be a good shot for the Cs300, tho!).
Strange days ahead for Boeing, I think.
Yep but the US will take Airbus down with it due to the foreign content laws.
We are in for a wild ride.
Latest from the Twit: We need more nukes.
Why crank out Boeings for the Great Mideastern Terrorist Rug Merchants, when you’re as likely as not to be at war with them in the next five years? Much better to watch nearly all Airbuses hit and destroyed on the Teheran ramps by Tomahawks!
In that case Boeing gets the money and we can sell them more aircraft when the radioactivity clears. As the PE is so fond of saying, WIN WIN.
Or we can pray that we are not so stupid as to wind up in a war there.
“Why crank out Boeings for the Great Mideastern Terrorist Rug Merchants, when you’re as likely as not to be at war with them in the next five years? Much better to watch nearly all Airbuses hit and destroyed on the Teheran ramps by Tomahawks!”
What a Gung-Ho BS. Have you ever been there? People from Dubai go there for Skiing as we speak. http://www.farsinet.com/tehran/images/winter_tehran.jpg
It’s interesting that the Conservative hard line elements put a stop to the A380 and 747 purchases because they wanted to concentrate on internal routes,not because it wasn’t a very good idea.Quite rightly they see international travel and communication as a threat to their power.Airbus were in a big hurry to deliver planes before Trump comes in, but it’s pointless for them and Boeing to get excited because there is only a finite global demand, someone else won’t buy.
Or maybe they recognized the issue with 4 engine VLA and did the rational thing?
Supposedly they will open up a market not served.
Have to see, I don’t see anything good coming out of the US for the next 4 years.
No idea where Iran wants to go for sure.
People want jobs and peace and the big boys do their thing.
” .. because they wanted to concentrate on internal routes,”
does not fit in with:
“.. get excited because there is only a finite global demand, someone else won’t buy ..”
Internal traffic is “new traffic”. No displacement and no other taker : “national”.
Uwe’r partly right. They said that they wanted to concentrate on internal routes but not only. There will also be a scrapping effect
Whatever. don’ tforget that the market gets expanded by 80million people with rather acceptable income.
More than China, much more than India.
not much less than Turkey.
What income? Economy is in the tank, they are barely limping along, all excess money spent on foreign adventures (Syria)
So no it won’t be 80 million far short.
It will be some, mostly Republican Guards with their high incomes!
you are so well informed …
… I bow to your judgement.
No judgment, I just deal in logic and facts (grin)
Emirates Defers A380 Deliveries:
Ripple affect taking hold.
Shorten sails, baton down the hatches, the bubble is officially over.
Questions that should be asked is does Emirates then pick up smaller aircraft more suited to a divers route structure?
Thats old news. Its just the Emirates acceptances being adjusted to the build rate of 12 per year- which was announced some time back.
eg LNC July 15 2016
“Airbus also holds an investors day during the Paris and Farnborough air shows. The latter’s was scheduled on Wednesday. The night before, the French newspaper La Tribune broke news that the production rate of the A380 will be reduced from 20/yr in 2017 to just 12/yr in 2018.”
Heres a production list including near future deliveries
there were 8 A380s delivered in the last 2 months of 2016 plus a number of others completed but not yet finished outfitting
But of course what we DIDNT get from Boeing is the 737-10 announcement.
“Despite a series of mixed messages from Boeing before and during the Air Show, the prevailing sentiment is that Boeing will proceed with the 737-10 derivative with a decision before the end of the year. – LNC July 15 2016
It looks to me like its been moved up or a change and the production will slow down sooner.
Could be wrong but …….
But China, too, depends on Boeing, and damage inflicted on the company would not be painless. China has a seemingly insatiable need for new aircraft, and can’t yet make them domestically. Boeing is also set to open a finishing plant near Shanghai this year, so the Chinese government may put quality jobs at risk if it were to cut the company off.
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And Happy New Year!