Leaders at Boeing have announced that the company will see more job cuts in 2017 in a further effort to reduce costs as orders have slowed.
Washington state's largest private sector employer has already cut jobs in its commercial airplanes unit by eight percent, according to a joint statement to employees from Boeing Vice Chairman Ray Conner and Commercial Airplanes Chief Executive Kevin McAllister.
The announcement comes a week after the company said it would once again reduce production of its 777 wide-body jet from 7 to 5 planes per month, after cutting the rate earlier this year.
Richard Aboulafia, an aerospace industry analyst at Virginia-based Teal Group, says the 777 is like a bellwether for international airline demand. Right now, there are too many planes and not enough high-paying customers.
"That's bound to have a cold-water effect on the market," Aboulafia said. "And because that twin-aisle market is where Boeing gets the majority of its commercial profits, you're going to see that show up in the form of cost cutting."
Aboulafia said many international airlines are now considering Boeing's 787, largely manufactured in South Carolina, or looking forward to the 777X, whose production is more automated than the basic 777.
Boeing has not said how many jobs are expected to be cut. At the beginning of 2016, the company employed more than 78,000 people in Washington. As of November, that number is over 72,000.
Conner and McAllister noted in their statement that while the total cuts to the commercial airplanes unit amounted to eight percent, 10 percent of executive and manager positions were cut.
"Right now, each BCA organization is analyzing its 2017 budget and staffing plans," they said. "We believe it is important to let you know the situation up front so you are aware as you make plans and decisions for the coming year."
Boeing says next year's cuts will come through attrition, voluntary layoffs, and possible involuntary layoffs.
