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Boeing on cost-cutting drive, employees face sack

11 February 2016

Fierce competitive pressure is forcing Boeing Commercial Airplanes into a new cost-cutting push that will include eliminating jobs, BCA chief executive Ray Conner announced at a senior leadership meeting on Wednesday morning and in a webcast to all employees.

According to employees who watched the webcast, Conner also said Boeing may decide as early as this year whether to go forward with a new midsize airplane to counter Airbus' success in sales of the A321neo, a project that would inevitably cost several billion dollars and add to financial pressure on the company.

No details were given on the timing or scale of the job cuts, but the tone of the announcement suggests a significant impact across BCA.

''We will start reducing employment levels beginning with executives and managers first,'' said company spokesman Doug Alder. ''We will also use attrition and voluntary layoffs. As a last resort, involuntary layoffs may be necessary.''

 ''The overall employment impact will depend on how effectively we bring down costs as a whole,'' Alder added.

The cuts are expected to hit Everett - where production cuts on the 747 and 777 were announced last month - more than Renton, where the 737 is still ramping up.

At the start of 2016, Boeing employment in Washington stood at 79,238, out of a companywide total of 161,368. That's down almost 7,800 jobs from the most recent Washington employment peak, in fall 2012, of 87,023.

According to two people who listened to the internal webcast spoken to by The Seattle Times, Conner said the job cuts are needed ''because Boeing cannot compete with Airbus right now on prices.''

''Conner said a lot of customers are really leaning toward Airbus, and we're having to cut our prices to come even close to making deals,'' said a 787 engineer. ''So we're talking extreme cost cutting.''

The employees spoke on condition of anonymity because Boeing does not allow workers to talk to the media without authorisation.

According to the two employees, Conner said Airbus is ''stealing massive orders from the 737'' with the new A321neo, and in response Boeing needs to decide ''as early as this year'' on whether to launch a new airplane to fill the gap between the 737 and the 787 Dreamliner.

Another employee said that while Conner made clear he wants a near-term decision on Boeing's response to the A321neo, a formal launch of a new jet would follow later, probably not this year.

Coincidentally, on Wednesday afternoon at the Pacific Northwest Aerospace Alliance's annual conference in Lynnwood, Airbus Americas marketing director Simon Pickup made a point of presenting a slide that highlighted the ''hole'' in Boeing's product line, where Boeing has no plane with the capacity and range to compete against the A321neo.


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