Boeing Lays Off 10% Workforce; 17,000 Employees Start Receiving Pink Slips – News18

Last Updated:November 14, 2024, 20:10 IST

Boeing is navigating these cuts amid lingering challenges, including a recent decline in production following a major incident in January and a seven-week strike that paralysed its operations.

Boeing has announced to lay off 17,000 employees, which is 10 per cent of its workforce to improve efficiency to help lift output again. The aerospace giant has started sending out pink slips from Wednesday after the planned round of job cuts, according to a Bloomberg report.

Boeing is navigating these cuts amid lingering challenges, including a recent decline in production following a major incident in January and a seven-week strike that paralysed its operations.

A significant risk remains: Trimming too deeply or cutting key roles could jeopardise Boeing’s recovery after years of turbulence. In the past, Boeing could rely on furloughed staff returning, but the dynamic shifted after pandemic-era layoffs led many, including highly skilled engineers and mechanics, to leave permanently.

Now, with a low 4% unemployment rate in Seattle, Boeing faces tough competition in attracting talent. Aerospace workers are highly sought-after, especially with the region’s space sector booming. Companies such as SpaceX, Blue Origin, and Amazon’s Project Kuiper are all on hiring sprees, particularly in the Seattle area where Boeing produces most of its commercial aircraft, said Stan Shull, an analyst with Alliance Velocity LLC. Opportunities range from Elon Musk’s Starlink satellite project to Jeff Bezos’s initiatives with rockets and lunar landers, according to the Bloomberg report.

The competition is fierce. Shull estimates there are around 1,350 open roles across more than 50 space companies in the Puget Sound area, spanning not just engineering but also machinists, administrative roles, sales, and marketing.

The current labour market creates additional hurdles for Boeing. “It works fine as long as labour markets aren’t tight,” said Richard Aboulafia of AeroDynamic Advisory, “but aerospace and defence labour markets are really tight.” Blanket layoffs, he warned, could cause Boeing to lose some of its top talent to more stable employers, according to the report.

This knowledge gap was evident as Boeing has faced setbacks in scaling production of its 737 Max jets. Executives later admitted they had underestimated the extensive training needed to bring new hires up to speed.

Even so, Boeing’s workforce size remains set for peak production levels not expected for years, especially after a recent 53-day strike brought operations to a standstill. Starting the year with 171,000 employees, Boeing has expanded by 12% over the last five years, despite challenges.

The recent strike underscored simmering tensions, which only eased when Boeing agreed to a 38% wage increase, though many workers remain frustrated by perceived pay inequities. CEO Kelly Ortberg, who stepped in this August, emphasized during an Oct. 23 earnings call that the 10% reduction is aimed at eliminating inefficiencies and narrowing focus. “We need to reset priorities and create a leaner, more focused organization,” Ortberg said. The goal, he explained, is to consolidate areas where inefficiencies persist and reduce non-essential activities.