Blaming lack of orders, analyst predicts more job cuts at Boeing

Just hours after reports came in Monday that Boeing expects more job cuts in 2017, aviation analyst Scott Hamilton told KIRO Radio that he expects to see more cuts before the end of the decade.

Hamilton says an “overall softness” in the global market is at least partially to blame for the job reduction. Production of the 777 and 747 has scaled back, he says.

“I see more job cuts by the end of the decade,” he said. “Based on the lack of orders.”

On top of that, more jobs could be cut thanks to increased automation, Hamilton says.

On Monday, a statement regarding the cuts was was released by Boeing Vice Chairman Ray Conner and Boeing Commercial Airplanes president and CEO Kevin McAllister.

The company will continue efforts to aggressively reduce overall spending in 2017. Further employment reductions will be necessary and will continue to come from a combination of attrition, leaving open positions unfilled where appropriate and offering a voluntary layoff program in early 2017. Involuntary layoffs may occur in some instances.

The anticipated reductions are 8 percent of total Boeing Commercial Airplanes staff, which will include a 10 percent reduction in executive / manager staff.

Boeing cuts coming in 2017

Citing an internal memo, The Seattle Times reports more cuts are planned for next year.

The job losses will be made through attrition, not filling open positions, and a voluntary buyout program, according to the Times. There may also be involuntary layoffs, the Times reports, citing the memo from vice chairman Ray Conner and chief executive of Boeing Commercial Airplanes Kevin McAllister.

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The reason for the cuts, according to the memo, has to do with “fewer sales opportunities” and competition, the Times reports.

Boeing has cut more than 6,500 jobs in Washington this year. That included 4,000 cuts over the summer. Aviation consultant Richard Aboulafia wondered in March if those would be enough to keep the company afloat.

Last week, Boeing said to expect lower production, and likely staffing levels, as demand for its 777 jets are lower than predicted.

“It’s no surprise whatsoever,” said Scott Hamilton with Leeham Company, an aviation consulting firm based in Issaquah, at the time.

“This has been long predicted by Wall Street analysts and myself,” he said. “It means the delivery rate will be as few as 3.5 a month … It means a lot lower cash flow. It obviously means there is a lack of demand for the airplanes.”

Essentially, Boeing doesn’t have enough 777 widebody airplane orders to justify its plan to deliver seven jets a month. The Times reported the company planned to reduce its production rate to five planes a month in August. The production rate will be further dropped to 3.5 planes per month in the year after that.

This is a developing story. Check back for updates.

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