Boeing to cut staff, production of planes built in South Carolina due to coronavirus
Boeing plans to cut its workforce by 10 percent because of the economic downturn caused by the coronavirus pandemic.
The aircraft manufacturing giant will use layoffs as part of the process to reduce the number of employees, Boeing President and CEO Dave Calhoun said Wednesday in a news release.
This will affect workers at Boeing’s South Carolina plant where final assembly on the 787 Dreamliner is done.
Overall, about 16,000 jobs are expected to be cut.
Boeing previously said it was offering voluntary layoffs, or buyouts, to its 161,000 employees. Voluntary layoffs, natural turnover and involuntary layoffs will now be the method used to reduce its workforce, Calhoun said.
“I’m sorry that I have to deliver this news,” Calhoun said in the release. “We have worked hard to maintain the stability of our workforce, avoiding layoffs even through the grounding of the 737 MAX. But these new reductions in our production rates and the continued impact of COVID-19 on our business will force us to reduce the size of our workforce.”
The announcement comes just as the South Carolina plant is set to reopen following a temporary shutdown to slow the spread of COVID-19.
That shutdown, and closing other Boeing facilities, cost the company $137 million, and overall the pandemic has cost the manufacturer $1.7 billion, CNN reported.
The job cuts will be more significant in Boeing’s commercial airplane business, where 15 percent of the staff will be removed, according to the release.
In addition to reducing the workforce at the North Charleston facility, production on the 787 will also be diminished, according to the release.
Boeing said it will make 10 of the widebody passenger jets per month this year, and that number will drop to seven per month in 2022 — with the hope that production will increase beyond then.
“The pandemic is ... delivering a body blow to our business — affecting airline customer demand, production continuity and supply chain stability. The demand for commercial airline travel has fallen off a cliff, with U.S. passenger volumes down more than 95 percent compared to last year. Globally, commercial airline revenue is expected to drop by $314 billion this year,” Calhoun said. “As a result, airlines are delaying purchases for new jets, putting the brakes on delivery schedules and deferring elective maintenance. We’re also seeing a dramatic impact on our commercial services business, as grounded airline fleets decrease the demand for our offerings.”
In addition to reducing its number of employees, Boeing said it will also save money through cutting costs and spending, suspending dividend payments, and extending its pause on stock buybacks. Calhoun said he and Chairman Lawrence W. Kellner are foregoing their salaries for the rest of 2020.
This is the latest blow to Boeing during the coronavirus spread.
On March 16, former South Carolina Gov. and UN Ambassador Nikki Haley resigned from Boeing’s board of directors after the company requested a bailout during the coronavirus pandemic.
A week later on March 23, an employee at Boeing South Carolina tested positive for COVID-19. At that point production continued on Boeing’s 787 Dreamliner.
Little more than a week after that on April 1, Boeing offered the voluntary layoffs because of the financial woes and future uncertainty caused by the coronavirus.
Boeing temporarily closed its South Carolina facility on April 8 because of safety issues created by the coronavirus.
Additionally, Boeing’s factories in Washington State were closed March 25, impacting about 70,000 employees.
“The aviation industry will take years to return to the levels of traffic we saw just a few months ago,” Calhoun said. “Our industry and our company will get through this. Air travel has always been resilient over the long term.”
This story was originally published April 29, 2020 at 11:50 AM.
