Boeing has decided to reduce its workforce by 10%. But the knife will also cut deeper in some areas. Commercial airplanes, services businesses, and corporate functions are poised to lose 15% of their workforce in the immediate future. The bad news was given to Boeing’s employees via email yesterday, Wednesday, 29 April.
“We have begun taking action to lower our number of employees by roughly 10% through a combination of voluntary layoffs, natural turnover, and involuntary layoffs as necessary,” said Boeing’s CEO Dave Calhoun in the email.
Decision attributed to a drop in travel demand
A report in Reuters attributes the reason as a drop in travel demand due to the pandemic. The email is yet another sign that the prominent aircraft manufacturer is going into survival mode to get through the fallout from the pandemic.
Boeing’s challenges will linger long after the pandemic subsides. With around half of Boeing’s aircraft sitting idle at airports around the world, the manufacturer expects it to take years for demand to ramp up again.
Pandemic changing industry according to Boeing CEO
That will see years of reduced revenue for Boeing, a cash-intensive business that spent USD$4.7 billion in cash in the last quarter.
“Team, the global pandemic has changed the way we live and work. It is changing our industry. We are facing utterly unexpected challenges,” the Boeing CEO told his employees yesterday.
In his email, Mr Calhoun explained what Boeing was doing to mitigate the downturn. But the industry and the business is under acute stress. The aircraft manufacturer has approximately 145,000 employees. That means 14,500 Boeing employees are to lose their job.
“This news is a blow during an already challenging time. I regret the impact this will have on many of you. I sincerely wish there were some other way,” said the Boeing CEO.
“Please know that we will do everything we can to minimize that impact, and as we take these steps, we will be as fair and transparent as possible — and absolutely honest and respectful.”
Mixed messages from Boeing
Generally, the news coming out of Boeing is mixed. Long dogged by the 737 MAX fiasco and problems with the Dreamliners, Boeing went into 2020 in a weakened position.
But the public focus has switched away from these previous problems as Boeing faces a more existential threat; surviving. The prognosis looked particularly grim as factories were shuttered and aircraft programs “suspended.” But then we see green shoots. Factories in Washington have re-opened, and the 787 program in Charleston is ramping up again.
Then today, we get the news that up to 14,500 workers look like permanently being out of work. Mixed messages to be sure.
Yesterday, the Boeing CEO spoke about the need to reduce commercial airplane production – the bread and butter of the manufacturer’s revenue. But he also noted Boeing was getting on with its 2020 priorities; getting the MAX back in the air and continuing to work with their domestic and global defense customers.
Mr Calhoun said work was continuing on the KC-46A tanker. In addition, development programs, including the 777X, 737 MAX 10, and CST-100 Starliner continue.
Boeing’s CEO does his best to strike an optimistic note
Dave Calhoun is striking as optimistic tone as he can. Having broken the bad news yesterday, he went on to say;
“Looking ahead, we will continue to concentrate on what is most important across Boeing. We will continue to invest in the future. We will continue to focus on our values and to drive safety, quality, integrity, and operational excellence in everything we do.
“I am confident that we will get through this difficult period because I am confident in all of you. And I am proud to be one of you.”