In mid-February we alerted Supply Chain Matters readers that Boeing’s Commercial Aircraft business was planning job cuts as part of a cost-cutting drive. The party line for this action was a response to rising competition from Airbus along with pressure from customers for lower pricing on new aircraft. In February, the aerospace firm indicated that it would utilize a combination of attrition and voluntary layoffs to primarily trim its executive ranks.
Today, The Wall Street Journal and other business media are reporting the announcement by Boeing that it plans to cut more than 4500 positions by June. Boeing is acknowledging to media outlets that in its commercial aircraft business segment the firm expects to initiate about 2400 of these cuts via attrition and approximately 1600 through voluntary layoffs. The cuts include “hundreds” of managers and executives which would indicate a trimming of organizational hierarchy. When considering previous reductions of 1200 positions, the overall reductions are expected to reduce Boeing’s overall employment by roughly 5 percent. The company has further indicated that any involuntary separations of unionized workers “would only be utilized as a last resort.”
Further included in expected cost cuts are reductions in inventory levels, improved productivity and significant cutbacks in business related travel. How these forthcoming cuts will impact the broader supply chain is yet to be determined.
Regarding our last update, there still appears to be no word concerning a U.S. Securities and Exchange Commission (SEC) has launching of a probe of Boeing’s accounting methods related to both the 787 Dreamliner and 747 programs.