Boeing told employees Monday it will continue to cut jobs at its commercial airplane unit in 2017, citing fierce competition with rival Airbus and a drop in new orders.
“While we have made progress in reducing costs and improving affordability, we will need to do more in 2017,” said an internal company message. “We will need to continue to reduce the size of our workforce next year.”
The company will start by leaving open positions unfilled and offering voluntary buyouts. It said it will only turn to layoffs as a last resort.
Boeing cut its commercial airplane unit workforce by 8% in 2016, including shrinking its executive ranks by 10%. A spokesman said the company has no specific target for reductions and is continuing to cut non-labor costs as well.
As of December 15, Boeing has 468 total orders for the year, compared to 768 total orders in 2015 and 1,432 in 2014. Boeing has a backlog of more than 5,600 airliners — mostly single-aisle 737s — to build over the coming years.
Boeing and Europe’s Airbus have been locked in an aggressive corporate rivalry, which has put pressure on both to lower the prices on their jetliners to win deals. In turn, both are cutting costs internally and with suppliers to preserve their profit margins.
Airbus told its labor unions in November that it was cutting around 1,200 jobs, according to a spokesman.
Airlines are scaling back their purchasing for several reasons, including geopolitical and economic instability. The industry is also slowing down after the unprecedented sales boom that followed the rebound from the global financial crisis.
Boeing last week announced plans to reduce production of its highly-profitable long-range 777 airliner from an average of 8.3 per month, or about 100 per year, down to 5 per month starting in August.
Boeing’s chief executive Dennis Muilenburg said in October it was still assessing if it would increase 787 Dreamliner output from 12 to 14 by the end of the decade, but had not yet secured enough orders.
Boeing’s commercial unit started 2016 with more than 82,500 jobs, mostly in Washington state. As of November 24, employment had fallen to around 77,400 according to the most recent data available.
Despite the weakness in sales, Boeing returns to shareholders continue unabated — the company last week hiked its dividend and approved $7.25 billion in new share repurchases.
