The head of Boeing’s commercial airplane division — which includes the company’s North Charleston campus — told employees during a webcast on Wednesday that the aerospace giant will trim its workforce, starting with executives and managers.
The announcement by Ray Conner, president of Boeing Commercial Airplanes, was part of a wider discussion focusing on the division’s finances and competitive landscape.
“To win in the market, fund our growth and operate as a healthy business, we are taking thoughtful steps to reduce the cost of designing and building our airplanes, part of which involves evaluating our employment levels across all of Commercial Airplanes,” Boeing spokesman Doug Alder said. “We will start reducing employment levels beginning with executives and managers first.”
It is not clear when workforce cuts would begin. Alder said the company also plans to use voluntary layoffs and attrition to reach its employment goals. About half of the airplane division’s workforce will be eligible for retirement in the next five years.
“As a last resort, involuntary layoffs may be necessary,” Alder said. “The overall employment impact will depend on how effectively we bring down costs as a whole.”
A spokeswoman for Boeing South Carolina referred questions to Alder.
Boeing employs about 7,500 people in North Charleston at facilities that include the 787 Dreamliner assembly plant, a propulsion facility, an airplane-interiors manufacturing site and a research and technology center.
Boeing does not break out the number of workers in each of its divisions, but the Chicago-based company employs about 165,500 people worldwide, most of them in the Pacific Northwest. A report by Reuters puts the airline unit’s employment at roughly 83,000 — down from its 1998 peak of 122,300.
Analysts have warned of a coming brain drain in the aerospace industry, where the average age of workers is 47, according to an Aviation Week study.
Aerospace has a greater number of baby-boomer workers — about 27 percent — than any other high-technology field, creating a “looming vacuum in technical knowledge and leadership,” Jim Adams of the PricewaterhouseCoopers consulting firm said in a 2015 report.
Those concerns apparently are being overshadowed, however, by Boeing’s competition with France-based Airbus, which has cut into Boeing’s single-aisle market share with its popular A320. Boeing, during a conference call last month, said it will deliver fewer airplanes in 2016. It also announced last month that it will cut the production rates on its 747-8 and 777 models.
Dreamliner production, on the other hand, is scheduled to increase to 12 per month later this year.
Wall Street pummelled Boeing’s stock in the days after the conference call, sending it to a 52-week low, where it has barely recovered.
Boeing has projected a need for 38,050 new commercial airplanes worldwide over the next 30 years. But Richard Aboulafia, vice president of Fairfax, Va.-based Teal Group, told the Pacific Northwest Aerospace Alliance convention this week that cheap fuel and softness in Brazil and key Asian markets are taking a toll on the industry.
“I’m starting to have people I respect saying, ‘The party is over, time for a downturn,’ ” Aboulafia said, according to a report in Puget Sound Business Journal.
Reach David Wren at 843-937-5550 or on Twitter at @David_Wren_