Boeing Redesigns Itself to Be More Competitive
A total of 50 executives will be cut by Boeing Co (NYSE:BA) in addition to the 500 jobs being cut over four years and the closing of two plants.
Boeing, the second-largest U.S. defence contractor, is looking to streamline its business. It therefore looked to cut these middle-management executives to create a faster decision-making process within the company.
“We need to be an agile organization that is more responsive to customers’ needs and committed to continually improving productivity,” said Leanne Caret, CEO and president of Boeing’s defense, space and security division, in a press release.
Boeing is also restructuring its military aircraft and space systems segments into smaller units, again with an eye on trimming fat.
The company is also relocating its defense headquarters to Washington, D.C. from St. Louis. The move will bring executives closer to officials who hold the purse strings of the American government.
The move arrives as the U.S. is looking to trim the military budget, with a keen eye on slashing costs where possible, while also maintaining combat effectiveness. Boeing, which derives nearly a third of its overall sales from defense, space, and security, cannot afford to lose out on those juicy government contracts.
As the company continues to compete in the U.S., however, many workers from Boeing will soon be out of a job as the plants close and much of the middle-management tier has been purged. While this may be the right move from a business perspective, many workers are expected to lose their jobs now with more cuts on the way as Boeing eyes efficiency by cutting redundancies.
This marks another blow towards the already embattled manufacturing sector as Boeing continues to find ways to trim its workforce, with 2018 looking to be a year of large-scale plant shutdowns by the company.
Boeing also faces a shrewd negotiator in Jim Mattis, the current Defense Secretary, whose recent statements have shown that he takes the military budget very seriously and will be looking to hold contractors to account. Boeing likely looked to cut costs in order to not only compensate for the increased competition, but also find ways to lower its costs in order to sell at the appropriate price that Mattis has in mind.
“Boeing to make job cuts at defense unit as it looks to become more competitive,” CNBC, June 13, 2017.