Boeing To Cut Up to 7,000 Jobs
By The Associated Press -- May 13, 1999
ST. LOUIS (AP) -- Boeing Co.'s recovery from two years
of financial troubles suffered a setback Thursday as the
aerospace company announced that a decline in orders for its
F-15 fighter plane will force the elimination of 6,500 to
7,000 jobs.
The job cuts will all take place at the company's massive St. Louis manufacturing operation and will represent roughly 35
percent of the work force there. The cuts will come from the
ranks of management and union members and are expected
to be completed by mid-2001.
Boeing has previously announced that it planned to eliminate
anywhere from 43,000 to 53,000 jobs in coming years. The
company said that Thursday's announcement pushes its
estimate to the higher end of that range.
Back in July of 1998, Boeing predicted that its total work
force of 238,000 would be reduced to roughly 185,000 to
195,000. Boeing currently employs 219,000.
Boeing has blamed most of its job cuts up until now on
reduced demand from Asian customers who were suffering
from that region's prolonged recession. Most of the previous
cuts came in the Puget Sound area near Washington.
Boeing suffered another blow last month when the Greek
government signed a contract to buy Lockheed Martin's
F-16. The F-15 costs about $55 million each, while the F-16,
an advanced fighter, goes for about $30 million.
Two weeks after Boeing lost the $3.5 billion sale to Greece,
the Israeli government postponed a $2.5 billion F-15
purchase.
The Greek order alone could have kept the Boeing line open
two more years.
''Once we completed an assessment of our business
environment based on the April 30 decision by the
government of Greece, we decided to let our team and the
community know as soon as possible what to expect for the
foreseeable future,'' said Jerry Daniels, Boeing vice
president, general manager and St. Louis site director.
''We remain committed to St. Louis and are taking these
steps to ensure our competitiveness on our existing work,
including a multiyear contract on C-17 and a proposed
multiyear buy of the FA-18EF and on future programs, such
as the joint strike fighter.''
Roughly 800-900 St. Louis workers already have been given
notice, said Daniels. About 300 to 400 workers would be let
go every month until the reduction is complete.
The F-15, first manufactured in 1972, is one of the old and
best-known fighter planes.
Daniels said displaced St. Louis employees may find work at
other Boeing sites.
Missouri lawmakers said loss of the F-15 jeopardizes U.S.
national security.
''The F-15 is the very best fighter airplane in the world,''
said Sen. John Ashcroft. ''If we allow the line to go down
where we don't have the next generation available to us, we
put U.S. security at risk,'' he said.
More than 1,500 F-15s have been delivered to the U.S. Air
Force, Israel, Saudi Arabia and Japan. Current orders for the
F-15 will be completed by early 2000.
Peter Jacobs, a Boeing analyst at Ragen Mackenzie Inc. in
Seattle, said the production declines in St. Louis will hurt
Boeing's revenue in 2000 and 2001, but the company may
also face a longer term problem rehiring skilled workers after that.
Boeing will need these workers as it ramps up production of
the F-18 Super Hornet, a new carrier-based fighter which is
being built in St. Louis, Jacobs said.
''One of the challenges Boeing will now face is getting the
skilled work force to come back when they're needed, he
said.
Jacobs added that the F-15s are at the tail end of their
delivery cycle.
''Even if Boeing would have won the order from Greece and
got the full order from Israel, it would probably have still
resulted in job reductions in St. Louis.''
There was a bit of good news for Boeing Thursday.
Boeing said it agreed to protect more than 3,000 Puget
Sound area maintenance and facilities jobs that had been
scheduled for elimination. The company said it saved those
jobs after union workers agreed to productivity
improvements.
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