Boeing is planning to lay off thousands of employees by the end of 2021. The job cuts are in addition to the previous 10% cut the company announced in April.
According to a letter from the company’s CEO, Boeing is looking to shrink its worldwide staff to 130,000 employees by the end of 2021. Boeing employed more than 160,000 workers when it announced its plan to offer voluntary layoffs in April.
The cuts could continue based on the third-quarter earnings report. It notes: “As the company resizes its operations to align with market realities, Boeing expects to continue lowering overall staffing levels through natural attrition as well as voluntary and involuntary workforce reductions.”
Boeing has struggled to regain its financial footing after a one-two punch involving the grounding of the 737 MAX and the pandemic.
During the pandemic, the company has reduced its spending and cut production and jobs. According to Boeing, the company delivered 37 planes through its defense contracts — the lone bright spot as the grounding of the 737 MAX stretches into yet another quarter.
There have been signs that the 737 MAX could be nearing approval to return to the skies in both the U.S. and the European Union, though the fallout of two deadly crashes that claimed 346 lives in late 2018 and early 2019 have led to a lengthy approval process.
In the latest financial filing, Boeing reported it’s restarted 737 MAX production at a “low rate” in Renton. Last month, it was announced that Dreamliner production will be cut in Washington state.
“I fully expect that a lot of the people I work with on a daily basis are probably not going to be there in a few months,” a Boeing worker said. “It’s kind of sad.”
Boeing President and CEO David Calhoun left employees with an encouraging tone despite the latest announced cuts. He wrote, in part: “We will emerge as a stronger company that is competitively positioned to deliver on our commitments to customers and realize new opportunities.”
Boeing is a big player in the Puget Sound area economy.
But University of Washington economist Jacob Vigdor said news of the job cuts is a long way from the Boeing bust of the 1970s when 100,000 jobs were lost.
“From a historical perspective, it’s still relatively modest. And what we have today in the Seattle area is just a much more diversified economy,” Vigdor said. “It’s not going to help with our recovery, but it’s probably not going to drive us that much further down compared to where we already are.”
The below message was sent to all Boeing employees by Calhoun:
"Thank you for all you’re doing for our customers, for our business, for one another and for our communities. As we navigate the current landscape, we’re taking actions to become more agile, more resilient and better positioned to capture the long-term opportunities that remain in front of us.
"This quarter, we made important progress working closely with global regulators on 737 certification efforts. We also introduced a comprehensive Safety Management System (SMS), which incorporates the many lessons learned from the internal and external investigations surrounding the MAX, and further drives our safety and first-time quality efforts across the enterprise.
"We delivered 37 aircraft to our defense customers and secured new services agreements for Boeing Converted Freighters and Australian P-8As. I am proud of the commitment and dedication you’ve demonstrated in delivering on these accomplishments and more for our customers during these challenging times.
"As we share our third-quarter financial results today, the deep impacts of COVID-19 on the commercial aviation market and our business are reflected in lower revenue, earnings and cash flow compared to this time last year. Our overall business continuity efforts and the diversity of our customer base, including our government, defense and space customers, provided some relief as we made difficult decisions and delivered on our commitments.
"Since the start of the pandemic earlier this year, we have raised liquidity, reduced spending, simplified reporting structures, and dramatically lowered commercial production rates. We’re also transforming Boeing by reshaping our infrastructure, streamlining our overhead and organizational structure, rebalancing our portfolio and investment mix, and strengthening the health of our supply chain. On top of these efforts, we have reprioritized and recommitted our research and development spending to ensure we are well-positioned for a strong recovery.
"As we align to market realities, our business units and functions are carefully making staffing decisions to prioritize natural attrition and stability in order to limit the impact on our people and our company. We anticipate a workforce of about 130,000 employees by the end of 2021. Throughout this process, we will communicate with you every step of the way.
"Our priorities remain the same - to strengthen our culture, improve transparency, instill operational excellence, rebuild trust, and ensure we always deliver the highest standard of safety and quality. By working together and focusing on these priorities, we will emerge as a stronger company that is competitively positioned to deliver on our commitments to customers and realize new opportunities.
"Please stay safe and take good care of yourselves and your families.