In response to order cutbacks from the financially ailing airline industry, General Electric Co.'s aircraft-engine business announced yesterday that it would reduce its 33,000-person work force by 3,900 jobs, or 11 percent, this year.
About 2,500 jobs will be eliminated at GE Aircraft Engine's headquarters in Evendale, Ohio, an industrial area outside Cincinnati.
About 700 jobs will be cut at the company's plant in Lynn, Mass., and 700 at smaller facilities elsewhere. About 2,300 salaried workers and 1,600 hourly workers will be cut.
Stock of General Electric, based in Fairfield, Conn., slipped 37.5 cents yesterday, to $84.125, on the New York Stock Exchange.
The engine maker hopes to reduce its payroll through attrition and voluntary departures. Its carrot is a comprehensive package of health-care and retraining benefits, even for those who have worked as little as three years.
Instead of trying to lower corporate costs by cutting employee retirement benefits, as some companies have done, "GE is managing its layoffs so they don't get a black eye; they want them to go voluntarily," said Patricia Wilson, head of A. Foster Higgins & Co.'s retiree health-care consulting practice. "GE is managing its bottom line by managing its people."
Paula Kollstedt, a company spokeswoman, declined to disclose the expected cost of the program, which comes in the wake of previous job losses because of military spending reductions.
The unit, which also makes engines for warplanes and helicopters, reached its peak in employment at 42,000 in 1989.
Last year, its operating profits fell 8 percent as revenue declined 5 percent, to $7.37 billion.
It is GE's second-largest business after its GE Capital Corp.
"GE is pretty good at sizing its business," said Martin Sankey, an analyst at First Boston. "It's not the panic reaction we're seeing out of Pratt & Whitney."
Last month, Pratt, the nation's No. 2 engine maker, said it would dismiss one-third of its Connecticut work force of 20,000 in the next two years. Its commercial customers -- Boeing Co., Airbus Industrie and McDonnell Douglas Corp. -- have had numerous cancellations of airline orders and requests for delays in deliveries.
Last week, Boeing said it would cut 28,000 jobs by mid-1994, and late last month McDonnell Douglas announced plans to cut about 10,000 jobs.
"Our commercial customers have suffered unprecedented losses in the last three years, and engine and spare-part orders are down," Brian Rowe, president and chief executive of the GE unit, said in a statement. Engines typically represent 20 percent of an airliner's cost.