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PUBLISHED: Jan 11, 2017 8:37am

Boeing warns of layoffs amid jet sales slump

The Boeing logo is seen at their headquarters in Chicago, in this April 24, 2013 file photo. REUTERS/Jim Young/Files

Source:
Reuters

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SEATTLE, 11 Jan 2017:

Boeing Co yesterday warned it will conduct involuntary layoffs of engineers – part of an ongoing cost-cutting drive, as the aerospace and defense company responds to increasing competition amid slowing aircraft sales.

The reductions, disclosed in an internal memo, also include voluntary layoffs.

The memo did not indicate the number of reductions the company planned. It listed dozens of job categories eligible for voluntary layoffs in Washington state, southern California and South Carolina.

“While we have made good progress, more changes are needed to ensure our long-term future,” John Hamilton, vice president of engineering at Boeing Commercial Airplanes, wrote in the memo.

“We continue to operate in an environment characterised by fewer sales opportunities and tough competition.”

A dispute over US$8.7 billion in Washington state tax breaks is heating up after Boeing joined a new lobbying group set up to preserve the industry incentives, the biggest in US history.

The group, launched yesterday, opposes efforts to make the aerospace tax breaks, passed in 2013, dependent on Boeing maintaining minimum employment levels in the state.

Such “claw-back” bills had failed the past two years, but union leaders and a lawmaker said in interviews they planned to try again in the legislative session that started this week.

The new group, Aerospace Works for Washington, will be a “megaphone” to warn that jobs are at risk, said Maud Daudon, chief executive of the Seattle Metropolitan Chamber of Commerce, which is leading the effort.

“We are in a competition to keep them here,” she said. “Any state in the country would die to get these jobs.”

The group also may oppose EU efforts to eliminate the incentives under World Trade Organisation rules, and may try to extend them to Washington’s growing space industry, Daudon said.

Chicago-based Boeing, the world’s biggest commercial aircraft maker, has its largest factories in Washington, and is the state’s largest private employer, with 72,000 workers.

As with previous proposals, “Boeing is opposed to any effort to alter the Washington aerospace tax incentives,” the company said in a statement.

“Changing the parameters of the incentives now would simply increase the cost of building airplanes in this state, and unnecessarily put excellent, family-wage jobs in Washington at risk.”

Aerospace Works for Washington has more than 30 members, including elected leaders, economic development organisations and chambers of commerce from state regions where aerospace manufacturers have factories. It includes trade groups of retailers, restaurants, hotels and other industries.

Alaska Airlines, owned by Alaska Air Group Inc, is also a member. No labour groups are involved.

Daudon said the broad membership signals growing opposition to changing the incentives.

Union leaders said their members still support the tax breaks “as long as Boeing doesn’t ship jobs out of state,” said Larry Brown, legislative director for the International Association of Machinists, District 751.

The 2013 tax cuts were designed to “maintain and grow” aerospace employment in the state and are available to any local aerospace manufacturer.

Since the law passed, Boeing has eliminated 11,414 jobs in Washington, about 15% of its state workforce, the company’s employment data showed.

In the year through November 2016, the state lost 5,500 manufacturing jobs, largely in aerospace, according to state employment security department data.

Boeing said in December that job cuts and movements were necessary to respond to competition from European rival Airbus Group SE and years of constricted US defence spending.

Boeing said it fulfilled its commitment in the 2013 law to locate the assembly line and wing factory for its new 777X jetliner in the state.

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