The Boeing Company, which lost a $3.6 billion satellite contract to Lockheed Martin, plans to lay off 750 employees in its Southern California facility, blaming on a downturn in its satellite assembly and integration business.
Boeing Co, which lost a potential $3.6 billion US Air Force satellite deal to Lockheed Martin Corporation last week, blamed US government delays in awarding the contract for a new generation of global positioning satellites known as GPS III.
"The stretching out of government contract awards, along with a continuing lighter demand in the commercial marketplace for large, high-power satellites, has created a surplus in the work force that must be addressed now so that we are competitive," Greg Cooning, general manager of Boeing Space and Intelligence Systems business unit, said in a statement.
The reductions are primarily in the area of engineering, although all skills will be affected, and will affect workers mostly in El Segundo and Seal Beach, California.
Boeing will issue 60-day notices in May for an initial group of 100 employees, with layoffs to occur in July. Another group will be notified at the end of June with redeployment occurring in July and August.
The Space and Intelligence System plans to have a work force of approximately 6,450 employees at the end of 2008, compared with its current count of 7,200.
Boeing said it is trying to redeploy many of the affected workers in California and at other sites where the company has suitable job openings.
"The loss of any Boeing employee is truly a loss, so we will do as much as possible to help our employees locate other opportunities within Boeing," he added.
The government has delayed the Pentagon's planned Transformational Satellite Communications System and a weather satellite system known as Geostationary Operational Environmental Satellites System.
The Pentagon last week awarded Lockheed Martin Corporation an Air Force contract worth up to $3.57 billion to build as many as 12 next-generation global positioning satellites.
The deal was the first of three awards intended to supply a total of 32 satellites for the Pentagon's new GPS III system. Lockheed manufactured the first satellites, putting itself in a strong position to win the two follow-on contracts.
The government also delayed other major satellite contracts involving NASA and other government agencies, Boeing spokesman Lewis Brinson said.
The job cuts mark the latest blow to Boeing's Southern California operations, the last major airplane factory left in Southern California, which once dominated the nation's aerospace industry.
Boeing, meanwhile, said despite the nearly 18 months delay with its new 787 Dreamliner airplane, it remains committed to its strategy of relying on major partners around the world to share the cost, risk and potential profits of new airplanes, although it may change the system with any new airplanes.
Boeing, with inadequate systems and shortage of people, will have to manage the supply chain for now.