March 21, 1998 in Nation/World

Boeing Slashes Jobs Latest Cuts Boost Total To More Than 20,000 Jobs That Will Be Eliminated By 2000

James L. Eng Associated Press
 

The Boeing Co. said Friday it will eliminate another 8,200 jobs by 2000 as it consolidates its mergers with McDonnell Douglas and Rockwell’s defense and space operations.

The job cuts, which Boeing said would be made mostly by attrition, are due to plant closures and discontinuation of the MD-80 and MD-90 jetliner programs Boeing inherited when it bought McDonnell Douglas last year.

Boeing plans to eliminate 15 percent of its factory space. The latest employment reductions are in addition to 12,000 job cuts announced in December and planned for the second half of this year.

Boeing employs 238,000 people worldwide.

“As a result of the merger with McDonnell Douglas and acquisition of Rockwell’s aerospace and defense operations, we are strategically realigning the use of our facilities to provide better value to our customers and shareholders,” said Phil Condit, Boeing chairman and chief executive officer.

Boeing bought the Rockwell segments in December 1996 and merged with McDonnell Douglas in August.

Boeing spokesman Larry McCracken said significant numbers of layoffs aren’t expected, that most of the job cuts will likely be accomplished through attrition.

About 6,200 of the 8,200 new job reductions will be in California, where the MD-80 and MD-90 jetliners are being phased out. Production of the former MD-95 - now the Boeing 717 - and the jumbo MD-11 remains in Long Beach, Calif., though the future of the MD-11 depends on how many more airplanes are sold. The company said it expects to have a clearer picture later this year.

No significant change in net employment is expected in Washington state, where Boeing has its headquarters and most of its workers.

In Missouri, where McDonnell Douglas divisions are based, a net loss of about 300 jobs is expected.

Condit said the cutbacks will not require the company to take a special charge against earnings.

Aerospace analyst Paul Nisbet of JSA Research Inc. in Newport, R.I., said the announcement was no surprise. He estimated the cuts and consolidation could save Boeing about a $1 billion a year by 2000.

“I think this should certainly silence critics who’ve been saying the company was taking too long getting to the point of rationalizing their military side of operations following their merger and acquisition of Rockwell,” Nisbet said.

Boeing, the world’s largest commercial-jet builder, bought McDonnell Douglas to bolster its defense and space business.

“It’s about what one would anticipate,” Nisbet said. “It’s a huge organization. This is a small percentage of people. They can’t come up with the kinds of savings that Lockheed and Raytheon have because their expansion has been predominantly horizontal rather than vertical.”

In January, Boeing reported a fourth-quarter loss of $498 million, or 51 cents a share, which it attributed to the costs of taking over McDonnell Douglas and production snarls in its jetliner assembly plants.

But Boeing said last month it was ahead of schedule on its plan for recovering from the production mess.


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