Boeing, recently hiring, now plans 12,000 layoffs 'When we get to an efficient position, we ought to be able to lay off people'


December 17, 1997|By BLOOMBERG NEWS

SEATTLE -- Boeing Co., after two years of struggling to hire and train enough workers to meet surging demand, said yesterday that it expects to cut employment at its commercial airline unit by 12,000 jobs, or 10 percent, next year.

The world's largest aerospace company said jetliner production will peak in mid-1998 and improved technology, such as computer links to suppliers, will allow it to eliminate jobs without reducing the number of aircraft it makes.

Most of the job cuts will come through attrition, Boeing said.

Boeing has hired 17,000 workers this year to ease assembly-line bottlenecks that forced it to halt production of some jetliners temporarily in October. The production problems, which resulted in a $1 billion third-quarter charge, are beginning to ebb as assembly-line glitches are worked out and more and more workers are trained.

"They had been on a [hiring] rampage; they've reached the optimum point," said Glenn Stewart, an analyst with A. G. Edwards who has a "buy" rating on Boeing shares.

After two years of steady gains, Boeing shares have languished this year because of the assembly-line problems. They rose $1.6875 to $50.625 yesterday.

Getting production up to speed was costly for Boeing, raising expenses for training and new equipment.

Once the lines are producing at capacity, the company will find better ways to run them, Boeing executives said.

"We've been about as inefficient as we could be; when we get to an efficient position, we ought to be able to lay off people," said Harry Stonecipher, Boeing's president and chief operating officer.

Boeing's commercial airline unit, which produces the world's most widely used jetliners, employs about 118,000 workers. The company's total employment, which includes recently acquired McDonnell Douglas Corp., is more than 230,000.

Jetliner sales have proved cyclical, with many orders coming in during good years for airlines and very few in other years. Boeing bought McDonnell Douglas for $16.3 billion earlier this year because McDonnell's extensive defense businesses are less cyclical and should allow Boeing to remain more profitable when jetliner sales slide.

Last month, the world's largest commercial airline and aerospace company said it would hire no new employees. Executives said they stopped hiring because they don't want to fire large numbers of workers when production falls in a few years.

That's a change from the last two years, when the company rapidly hired 40,000 workers in an ef- fort to double production to 43 planes a month by the second quarter of next year.

Boeing said it was on track to meet that production goal, and will also meet its revised goal for the number of jetliners it expects to have ready for delivery in 1997.

Last month, the company said it would deliver 335 craft this year, down from earlier plans for delivery of 345 to 350 aircraft.

"Customer-unique circumstances" may keep some buyers from taking final delivery of a "small number" of planes, even though the planes will be ready on time, Boeing said. The company said it expects that deliveries of four to eight planes will be delayed.

Boeing has received a total of 458 orders this year, compared with 559 for all of last year and 338 in 1995. More still may be announced before the end of the year because a spurt of orders is usually logged in December.

Despite its production snafus, the company said it expects to deliver the first of its new-model 737-700 jetliners to Southwest Airlines this week, and plans to deliver three more later this month.

Plans call for 27 of the new 737-700s to be delivered to Southwest by the end of the first quarter of 1998, the Seattle-based aircraft maker said.

Production of the 747 jumbo jet, Boeing's largest plane, is set to increase to five a month from four, and production of the 737 to 14 a month from seven.

Pub Date: 12/17/97

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