Boeing Announces Reduction of 10,000

[AKPilot]

Well, today Boeing announced it's Employee Incentive Plan bonus of six extra days of pay. One hour later the CEO announced a reduction of workforce to the tune of 10,000 people. Talk about an oxymoron!

This is going to be interesting . . . I knew I picked a bad time to give up drinking root beer.

I wish they would've kept the bonuses and ensured as many people have a job as possible.

 

[Peartree]

Here's where I get confused. If a business slows down and there isn't enough work, then sending employees home might make some sense (ex. - GM already has a six month supply of cars, why build more?). But if airframe manufacturers like Boeing have (as they used to always claim) orders for the next three to five years of production, then how can they be slow and what sense does it make to send people home?

Or, has the organization become bloated and in need of thinning and the economy provides sufficient cover so they can make an employee layoff they should have had the sense to avoid in the first place?

What's the skinny?

 

[AKPilot]

Yes, this is something that's confusing to me about American business sense.

Boeing does have an enormous backlog of confirmed orders. Giving employees a "bonus" in pay and then subsequent payraises, then "in turn" announcing a significant layoff is a paradox.

Maybe I'm cut from a different cloth, but I'd tell them to keep my bonus, keep my payraise, and keep my friend employed. Oh, and I forgot, please don't give Sr. Execs multi-millions in bonuses either. Why does a multi-millionaire need even more money? They already have their home, two cars, and other toys.

 

[shreadvector]

Here's where I get confused. If a business slows down and there isn't enough work, then sending employees home might make some sense (ex. - GM already has a six month supply of cars, why build more?). But if airframe manufacturers like Boeing have (as they used to always claim) orders for the next three to five years of production, then how can they be slow and what sense does it make to send people home?

Or, has the organization become bloated and in need of thinning and the economy provides sufficient cover so they can make an employee layoff they should have had the sense to avoid in the first place?

What's the skinny?

I am not an official spokesperson for the Boeing Company and we are not supposed to post 'news' reports about the company. Posting a link to an existing news report is probably OK.

There should be plenty of reports online regarding the many, many aspects of the business. There are commercial jetliners, military cargo planes, tilt-rotor aircraft, rockets, satellites, etc, etc. Some programs are at a point where the number of orders has slowed, and so production should slow to avoid a complete shutdown. Other programs have well reported problems related to "outsourcing" of design and manufacture.

As reported, the reductions are supposed to consist mostly of not-replacing folks who retire/die, eliminating contract hires ("job shoppers"), and then laying off as necessary. There is a pretty huge effort to find positions for most people in the other programs that need to hire, but that often requires "relocation".

We always need field support folks in Alaska.....

 

[AKPilot]

Fred, I thought you were the company spokesperson. That's what they told me, when I called them to ask. LOL!

I ain't going to Fort Greeley, I've been through there. And if you think Fairbanks is small and isolated, Delta Junction is the size of a city block. Of course, there's also Adak. Plenty of fishing there. Heck if I'm going to move I might as well go to Boeing, Australia.

As for news reports that applies to items not already in the public domain.

 

[mach7]

Well Troy if you head back to Alaska you can always stop by Skinny Dick's for a beer!

 

[shreadvector]

https://www.elmendorf.af.mil/

Fred, I thought you were the company spokesperson. That's what they told me, when I called them to ask. LOL!

I ain't going to Fort Greeley, I've been through there. And if you think Fairbanks is small and isolated, Delta Junction is the size of a city block. Of course, there's also Adak. Plenty of fishing there. Heck if I'm going to move I might as well go to Boeing, Australia.

As for news reports that applies to items not already in the public domain.

 

[AKPilot]

https://www.elmendorf.af.mil/

Been there, done that . . .

AK's Previous Squadron

 

[bobkrech]

You have to remember that Boeing has 5 Business Divisions and commercial aircraft is only one of them:

Commercial Aircraft https://www.boeing.com/commercial/
Integrated Defense Systems https://www.boeing.com/ids/
Boeing Capital Corporation https://www.boeing.com/bcc/
Phantom Works https://www.boeing.com/phantom/
Shared Services Group https://www.boeing.com/ssg/

Of these 5 official business units, only the Commercial Aircraft and the Integrated Defense Systems are "real" businesses that make money.

Boeing Capital Corporation basically figures how to get customer financing for their commercial aircraft sales, the Phantom Works is the Boeing R&D group and the Shared Services Group is exactly that, provides Corporate Administrative functions such as personnel, accounting, logistics and real estate.management, etc.

While on paper Boeing has a huge (>3,000) commercial plane backlog, in reality they are late on deliveries, partially due to strikes, and more significantly due to underestimating the complexity of manufacturing the 787 Dreamliner. Many 787 orders arose from canceled Airbus orders because of delayed deliveries, and now Boeing is starting to get 787 cancellations due to delayed deliveries. Furthermore the airlines are all loosing money after last year and many are looking for excuses to get out of their expensive purchase contracts, so the buisness unit is likely to have lower sales as more orders are canceled or pushed back.

Integrated Defense Systems design, build and maintain weapons systems, and provide personnel and logistical support for the government and government facilities. Weapon systems are expensive and with specification creep, are getting more expensive. Coupled with huge Federal budget shortfalls, it is likey that some of these weapon system procurements will be reduced in scope, delayed, spread out over a longer time period or simply eliminated, so this business unit is likey to have lower revenues as well.

The Boeing operating margins went negative in the Q4 2008, and they have a huge negative Q4 2008 cash flow of -$1.641 B compared to the good positive +$1.893B cash flow in Q4 2007, a stagering swing of -$3.53 B, and that's why Boeing has no choice but to lay-off 10,000 employees.

https://www.boeing.com/news/releases/2009/q1/090128a_nr.pdf

https://www.ft.com/cms/s/9e33a2da-eda7-11dd-bd60-0000779fd2ac.html

https://www.forbes.com/feeds/ap/2009/01/29/ap5985435.html

Bob

 

[Peartree]

Thanks all, that makes sense.

 

[Sheri]

...

 

[sunward]

....now Boeing is starting to get 787 cancellations due to delayed deliveries. ...

They are not the only ones.
Textron swings to 4Q loss, 2009 outlook dim

On Thursday, textron had the same type of news. "additional 2,000 positions from its Cessna Aircraft division." Although the company had a record 2008, they "had 23 cancellations and an unprecedented number of deferrals in the fourth quarter."

Even though the order books are full, there are issues.

 

[AKPilot]

Cool planes, Did you fly the B-24?

Yah, you're really funny!

I'd love to get my type rating in one but, don't have the extra cash to do so.

 

[Delta-IV]

I ain't going to Fort Greeley, I've been through there. And if you think Fairbanks is small and isolated, Delta Junction is the size of a city block. Of course, there's also Adak. Plenty of fishing there. Heck if I'm going to move I might as well go to Boeing, Australia.

Again that is...., Boeing sent me there for 7 months in '04 and that was during the good months (April-Oct). But, then I spent the next 10 months getting sunburnt in Kwaj.

United Launch Alliance (50% Boeing, 50% Lockheed) is shedding jobs too. We havne't yet been told what our EIP will be. But all Salary folks now have to give 5 hours free before we get any overtime. I can live with that if that really saves some jobs.

 

[mjennings]

I just had a guy who used to be at Greeley start in my group today, said Tuesday it was -34degrees and they were just starting to see the sun peek over the horizon again. I thought it worked that you either got the carrot or hit with the stick the carrot was on, not here's the carrot and than whack.

 

[Sheri]

...

 

[bobkrech]

They are not the only ones.
Textron swings to 4Q loss, 2009 outlook dim

On Thursday, textron had the same type of news. "additional 2,000 positions from its Cessna Aircraft division." Although the company had a record 2008, they "had 23 cancellations and an unprecedented number of deferrals in the fourth quarter."

Even though the order books are full, there are issues.

Like cashflow.

All these jets are built to order, and they have a $2.7M to $30M price tag. Few big corporations doing business with the government (getting bailout money, etc.) are going to take delivery of a new corporate business jet now, and I'm guessing that a lot of companies that have ponied up deposits checked their cashflow, and have discovered that with the current economic downturn, they can't afford to make the payments even if they can get financing, and if you really need a coporate jut, there's a lot of good deals in the used market as the big boys unload their toys.

Cessna can't deliver the planes they are building, but they had to paid for the labor and the materials that went into them from their own resources, hence the negative cashflow. Living with a negative cashflow can work for a while provided some one will give you credit (it's called investing in yourself) however because of the world-wide credit crunch brought on by inflated and overvalued investments and the subsequent loss of faith in the investment markets, there is no credit to be had. If you can't meet payroll, you can't furlough employees, you have to lay them off.

Unfortunately each generation has to relearn this lesson the hard way.

Bob

 

[Fred22]

Bob it is good to see you again Frankly I don't find alaska's weather sounding too bad. We did -32C for a month aound december with snaps down to -40C I feel for folks layed off. I hope everything works out for them.
Cheers
Fred

 

[H_Rocket]

Exxon just announced record profits - They should be filing for Chapter 11 any minute now...