The Boeing Co. announced Thursday that it will cut 7,000 jobs this year, creating a major speed bump for the Washington state economy.
Despite rapid growth in software and other hightechnology industries, Boeing still employs 4 percent of the state’s work force. About 6,500 of those jobs will be cut as the Seattle-based company trims production on its 737 and 767 aircraft.
Bret Bertolin, a senior economic forecaster for the Office of the Forecasts Council, said the state would need to adjust tax revenue estimates downward. Previous estimates were based on losing only 400 Boeing jobs this year.
Boeing already has shed about 20,000 jobs in Washington in the past three years.
“These job reductions are higher than we anticipated just a few weeks ago,” Boeing Chairman Frank Shrontz said Thursday.
“Since the beginning of the year, several customers came to us asking to postpone airplane deliveries because of the continued softness of the airline industry,” he said.
None of the 460 people who work at the Boeing fabrication plant in Spokane have been given a 60-day layoff notice required by law.
But officials said they have yet to determine where the Washington layoffs will occur, and the Spokane plant and other suppliers of airline components could be the first to get hit as the company slows the rate of airplane production.
“It will probably be a few weeks before we can say to individual employees what effect this will have on them or their plant location,” said Boeing spokesman Christopher Villiers in Seattle. “With the 737 decreasing production, plants like Spokane will notice it earlier.”
Boeing delivered 441 airplanes in 1992, Villiers said. This year, it will deliver only 230.
The 5-year-old plant near Airway Heights makes airconditioning ducts, floor panels and other flight-deck parts for Boeing jetliners.
Economists said the Boeing cutbacks will affect everything from retail sales to restaurants, especially in Western Washington.
“The Puget Sound area could be harder hit economically by these latest cutbacks than in the past three years, when a growing national economy helped soften the blow locally,” said John Mitchell, economist with U.S. Bancorp in Portland, Ore.
But this layoff announcement comes a day after the Federal Reserve raised interest rates for the seventh time in a year, trying to slow down the national economy.
Bertolin estimated that Boeing cutbacks would result in a statewide loss of 20,000 jobs and $1 billion in personal income.
“The economic impact will come most from the loss of spending among (former) employees,” he said.
Gov. Mike Lowry expressed hope that the state’s economy is strong enough to withstand the layoffs.
“Of course, everyone in the state cares about any family, any individual who loses their job,” Lowry told reporters at a hastily called news conference following the Boeing announcement.
“But I also want to say that our state continues to be in a very strong economic position. We have diversified our economy very successfully.” Boeing is also trimming 500 jobs in Wichita, Kan., and 800 jobs in Philadelphia. About 800 jobs will be added at other Boeing operations: at the Space Station Complex in Houston and at Litton Precision Gear in Chicago.
Attrition, including retirements, is expected to help achieve some of the downsizing, but there will be layoffs, a process that has already begun.
The cuts mean Boeing will likely never again employ more than 100,000 workers in Washington as it did in the 1980s. Boeing’s statewide employment dropped to 81,964 on Jan. 1, down from more than 106,000 at the beginning of 1990.
Engineers and technical workers, many of whom are members of the Seattle Professional Engineering Employees Association, the secondlargest union affiliated with the company, may take a greater hit than in the previous three years of layoffs.
Fewer engineers are needed for the 777 now that it is in production, and staffing for new 737 programs already is in place.
Rick Herrmann, a former shop steward for the International Association of Machinists, the largest union at Boeing, said workers at the Renton assembly plant were distressed following media reports predicting the cuts.
“They thought that since they still had a job, it was safe. They had no idea the latest cuts would hit this hard,” he said.
“This was supposed to be the year things were getting better,” said Connie Kelliher, IAM District Lodge 751 spokeswoman in Seattle.
Ryan Niemi of Kent, an inspector of wire harnesses for the 737 and 757 at the Renton plant, said the mood in his division was “resigned.”
“People knew these cuts were coming,” he said. “It’s been glum for a long time.” Niemi moved to the wire unit three years ago after the aerospace division downsized and he was let go. He expects his 13 years of seniority will insulate him from the cuts this time.
Dan Berardi, a nine-year Boeing worker from Skyway, is less certain.
“I don’t care how many years you have,” Berardi says, “you can’t feel safe.’