Boeing Co. will lay off thousands of U.S. workers this week as it seeks to cut a tenth of its workforce and offset plummeting demand for new aircraft caused by the coronavirus pandemic.
About 6,770 employees, including an undisclosed number at Boeing South Carolina, will lose their jobs in the aerospace giant's first round of involuntary layoffs, CEO David Calhoun said in a letter to employees Wednesday morning.
The company had said late last month that it would shed about 10 percent of its jobs worldwide due to the "body blow" that COVID-19 has dealt its business.
"The COVID-19 pandemic's devastating impact on the airline industry means a deep cut in the number of commercial jets and services our customers will need over the next few years, which in turn means fewer jobs on our lines and in our offices," Calhoun said in Wednesday's letter.
The company has not specified how this week's layoff total will be distributed among specific sites, including the 787 Dreamliner factory in North Charleston, but Calhoun has said the commercial airplanes and services divisions will bear the brunt of the layoffs, losing about 15 percent of their jobs.
In South Carolina, where Boeing employed about 7,000 workers prior to the health crisis, a 15 percent cut factors out to around 1,000 jobs.
Boeing is currently the largest private-sector employer in Charleston County. Beyond its own labor force, the aerospace giant indirectly supports thousands more jobs in the state through its network of suppliers.
In addition to the workers being laid off, another 5,520 employees nationwide will leave the company in the coming weeks after opting into a voluntary layoff program that was announced as a cost-cutting measure in early April.
Boeing offered voluntary layoffs at its North Charleston plant but is not disclosing how many eligible employees at specific sites took the offer.
Together, about 12,290 U.S. employees will be leaving the company through a combination of buyouts and the first wave of layoffs. Boeing did confirm that, of that combined total, nearly 10,000 are employees based in Washington state.
Hundreds of workers across a few of Boeing's international sites, including a factory in Winnipeg, Canada, have already announced layoffs, too, bringing Boeing's current global job cut total past 13,000.
Since Boeing employed around 160,000 people worldwide before the coronavirus crisis, a 10 percent reduction wouldn't be reached until the company is down to about 144,000 jobs.
The announcement Wednesday represents the largest segment of layoffs, according to a statement from a Boeing spokesperson. The "several thousand remaining layoffs" will come over the next few months.
In addition to cutting jobs, the aerospace giant is also slashing production rates in response to the drop in demand for aircraft.
Production rates for the wide-body Dreamliner that's built in North Charleston are being halved. Boeing had been producing 14 of the jets each month, with production split between its South Carolina plant and a factory in Everett, Wash.
That number is dropping to 10 per month this year and eventually just seven per month by early 2022.
The company has said it plans to return the rate to 10 per month by 2023, a prediction which Cannacord Genuity analyst Ken Herbert described in a note to investors last week as "overly ambitious."
Demand for wide-body jets like the 787 is expected to be depressed even longer than other aircraft, Calhoun said during the company's earnings call last month, because of sustained declines in long-haul international flights.
Even before the health crisis took hold, Boeing posted a zero-order month in January, which was largely attributed to the continued grounding of the 737 Max that was pulled from the skies following two deadly crashes.
Boeing again failed to sell a single commercial airplane during the month of April.
Calhoun did note a couple "green shoots" they're seeing: Economies are starting to slowly reopen, and some of the planemaker's customers are reporting that new bookings are outpacing flight cancellations for the first time since the pandemic began.
Still, a full recovery for the industry is years away.
For the Boeing workers whose jobs will survive the forthcoming job, Calhoun wrote in his letter that "enormous challenges remain." The company will have to adjust its business plans "constantly," he wrote, until the pandemic "stops whipsawing our markets in ways that are still hard to predict."