Citing defense budget cuts and delays, Boeing Co. announced Monday it would restructure its Wichita operations and lay off about 900 workers or about 25 percent of its current work force at the plant.
The Chicago-based company said its Wichita defense plant will focus on military 747 and wide-body aircraft modifications and upgrades. It also plans to continue its engineering center, focusing its engineering work here on the B-52 Stratofortress and other defense and civil aviation related businesses.
"There has been much speculation about the future of Boeing in Wichita in recent months," Derek McLuckey, general manager for Boeing's Integrated Defense Systems in Wichita, said in a news release. "Today we are telling our employees that we must right-size our operations for available work performed in Wichita. And we are telling them that we now have to execute a revised business plan in order to ensure our future."
Boeing said it will issue 60-day layoff notices to 360 workers on Tuesday. An additional 240 employees will lose their jobs by the end of July and 300 more jobs will be cut in mid-November, the company said.
"This is out of the blue, as far as I know," said Garland "Bear" Moore, business representative for the International Association of Machinists and Aerospace Workers, the largest union at the Wichita plant. "They told us as late as Friday no layoffs were in the works."
By the beginning of 2007, Boeing's Wichita defense plant will have about 2,700 workers, the company said.
Ralph Stout, who celebrated his 25th anniversary as a Boeing employee on Sunday, said layoffs had been rumored for some time now. Workers were told about the job cuts at the end of Monday's afternoon shift.
"It is a huge shock. Tomorrow I will get a better feel what people feel. Naturally nobody wanted this to happen," said Stout, who is president of IAM's Local 834.
The announcement came after a review of the Defense Department's budget and a reassessment of the site's future business plan, the company said.
"We are creating a plan that we believe gives us the best opportunity to go forward," said Boeing spokesman Forrest Gossett.
The company's restructuring plan will put Boeing's Integrated Defense Systems in Wichita in the best position to succeed, Gossett said.
Boeing will move management of the KC-135 program and a number of light engineering jobs to its Oklahoma City, Okla., site later this year. That comes as Boeing's 20-year contract to install new engines on the U.S. Air Force's KC-135 fleet comes to an end.
Aviation analyst Richard Aboulafia of the Teal Group in Fairfax, Va., said the Boeing defense layoffs were a "serious aberration" in the defense industry, which has been on the uptick because of war.
"These are unlucky card draws," he said. "The broader market is still going up, but there are an awful lot of programs that need funding - and the budget isn't rising fast enough to take care of all of them."
The U.S. defense procurement budget alone before 2002 was in the mid-$50 billion range, he said. Defense procurement spending is now more than double that, at $109 billion, not including the costs of operations and maintenance, Aboulafia said.
"That kind of says it all," he said.
Shares of Boeing fell 58 cents to close at $82.35 in trading Monday on the New York Stock Exchange, where it has traded in a 52-week range of $56.22 to $84.23.
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