News of layoffs are circulating everywhere and Boeing’s employees have gotten their fair share, as the company struggles to sell planes in the face of a strong dollar.
In a full letter sent to employees, Boeing has warned workers that more layoffs may be coming in 2017, in a move that was not completely unexpected. The news came in a joint message from vice chairman Ray Conner and the CEO of Boeing Commercial Airplanes Kevin McAllister, in order to make employees aware of the situation in the hope of assisting them with their plans for the New Year. The job cuts will be a combination of unfilled positions, attrition, a voluntary buyout program, and possible layoffs. The buyout will be one week of pay for every year worked, with a maximum of 26 weeks. A week ago, Boeing announced that it would reduce the amount of production for the 777rate from seven planes per month to five planes per month, beginning in August 2017.
Although the company did not say how many jobs it will cut next year, it reassured employees that is still assessing its 2017 budget and employment needs.
“To successfully compete and win new orders that will fund future product development and growth requires us to achieve much better performance,” Conner and McAllister said in a public memo to Boeing Commercial Airplanes employees on Monday.
The company is contending with a strong dollar that makes its products more expensive abroad, a non-functioning US Export-Import Bank that hampers aircraft financing, and President-elect Donald Trump’s provocation of China, which is one of Boeing’s biggest markets. Trump has also shot criticism at Boeing, saying that the United States should cancel a pending order to buy modified Boeing 747s as new presidential aircraft, Air Force One, because of the high cost.
Boeing has recently just 468 net jetliner orders this year, which is down from 768 last year and 1,432 in 2014. The figure is also well below Boeing’s target of having sales roughly match the 745 to 750 aircraft Boeing expects to deliver to customers in 2016.
The company also is under pressure to cut costs as it tries to hit Chief Executive Dennis Muilenburg’s goal of lifting its operating profit margins to the mid-teens by 2020, which has averaged 6.9 percent over the last decade.
“While we have made progress in reducing costs and improving affordability, we will need to do more in 2017. This means we will continue working aggressively across BCA to reduce non-labor costs. It also means we will need to continue to reduce the size of our workforce next year. By the end of this year, we anticipate a reduction of 8 percent in total BCA employment since January. This includes a 10-percent reduction of executives and managers. In 2017, we will continue to focus efforts on matching employment levels to business and market requirements.” the letter stated.