December 17, 1997 in Nation/World

Boeing To Eliminate 12,000 Jobs 1998 Cutback Follows Hiring Spree Over Last Two Years

George Tibbits Associated Press

Boeing spent much of the year frantically hiring to overcome production problems. Now, top executives hope to cut the work force by about 12,000 next year - if things get back to normal.

For the moment, however, Boeing is still struggling to get jetliners out the hangar door, paying large amounts of overtime and asking employees to work through the Christmas holidays.

Boeing is trying to finish the year by completing about 335 of its Boeing-model jetliners, slightly behind the 340-350 planes it had projected earlier this year.

“This continues to be a significant challenge,” Ron Woodard, Boeing Commercial Airplane Group president, said Tuesday. To make it, the company wants some employees to work the week between Christmas and New Year’s, when it traditionally shuts down.

Two years ago, Boeing was paying workers to take early retirement. Now it has hired tens of thousands to meet an unforeseen surge in aircraft orders. Many are working overtime, and Boeing faces billions of dollars in costs as it struggles to more than double jetliner production.

The goal, said Boeing President Harry Stonecipher, is for the company to be back on track in the second half of 1998 and then to start cutting back on the extra people.

“I think we have been about as inefficient as you could be this year …,” Stonecipher said.

Boeing Chairman Phil Condit said there may be some layoffs, but the company hopes to reduce its employment through attrition. A company of Boeing’s size, about 235,000 workers, normally loses some 11,500 a year through retirements and voluntary resignations, he said.

Because of its wide array of operations - Boeing merged this year with aircraft maker McDonnell Douglas - the company should be able to move many excess workers into new jobs, Condit said.

Boeing hired and recalled about 41,000 workers in the past two years, mostly to help increase commercial jet production, spokesman Peter Conte said.

Assembly lines were scrambled by a parts shortages, a lack of skilled workers and an ambitious plan to boost production to 48 planes a month by next year. As a result, the company was forced to halt the 747 jumbo jet and new-generation 737 assembly lines for a month so it could catch up on work. Problems found during flight tests for the new 737-700 added to the woes.

Woodard said Boeing plans to deliver the first 737-700 to Southwest Airlines on Wednesday, about two months later than originally planned.

Counting McDonnell Douglas’ MD-Series jets, Boeing expects to offer for delivery 375 to 385 commercial airplanes in 1997. Next year, it plans to deliver 550 jetliners, including 505 Boeing models, it said.

In early October, Boeing announced it was stopping the 747 production line for 20 days and nextgeneration 737 final assembly for 25 days. Today, factory operations are “essentially back in sequence” and overtime is down to 17 percent from a high of about 21 percent, Woodard said.

Boeing has warned that the assembly line problems and late deliveries will cost it about $2.6 billion in 1997 and 1998. In October, the company reported a third-quarter loss of $696 million.

Traders responded positively to the news, pushing Boeing’s stock up $1.68-3/4 to $50.62-1/2 on the New York Stock Exchange.

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