Posted on 11/07/2012 11:22:15 PM PST by My Favorite Headache
Boeing announced a major restructuring of its defense division on Wednesday that will cut 30 percent of management jobs from 2010 levels, close facilities in California and consolidate several business units to cut costs.
Boeing Headquarters The company [BA 70.11 -1.47 (-2.05%) ] told employees about the changes on Wednesday, in a memo obtained by Reuters and confirmed by Boeing.
Boeing, the Pentagon's second-largest supplier, said the changes were the latest step in an affordability drive that has already reduced the company's costs by $2.2 billion since 2010, according to the memo.
The measures come as U.S. weapons makers are under pressure to cut costs and preserve profit margins amid dwindling defense spending in the U.S.
In a message to employees, Dennis Muilenburg, chief executive of Boeing Defense, Space & Security, said the company aimed to cut costs by an additional $1.6 billion from 2013 through 2015.
"We are raising the bar higher because our market challenges and opportunities require it, and our customers' needs demand it," Muilenburg said.
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He said the total savings would reach $4 billion, making the company healthier and better able to deal with a tougher marketplace.
He said Boeing would cut the number of executive jobs an additional 10 percent by the end of 2012, bringing overall cuts in its executive team to 30 percent for the past two years, a move that would result in a 10 percent cut in management costs.
Boeing said the changes were not a response to the threat of additional, across-the-board U.S. budget cuts due to take effect on Jan. 2, or the outcome of U.S. elections, but represented another step in its continuing drive to "be more competitive while investing in technologies and people."
Boeing said it could not project exactly how workers would lose their jobs because it would try to place people in its growing commercial business.
A company spokesman declined to say how many jobs had already been cut from the 2010 level.
Rival Lockheed Martin has reduced its management ranks by about 25 percent in recent years after announcing a voluntary buyout.
Boeing said it would also expand its efforts to cut supply-chain costs by working closely with its suppliers, but did not provide details.
Defense consultant Loren Thompson said the changes were needed to ensure Boeing's continued profitability.
"Many investors focus on Boeing's commercial operations," Thompson said, referring to the jet-making business.
"But defense provides 40 percent of the company's revenues and returns, so controlling costs there is crucial to maintaining the company's overall profitability."
Boeing and other top weapons makers like Lockheed Martin [LMT 91.15 -3.72 (-3.92%) ], Northrop Grumman [NOC 66.70 -3.18 (-4.55%) ] and Raytheon [RTN 55.47 -1.87 (-3.26%) ] have focused heavily on cutting costs and drumming up foreign sales to maintain profits as they prepare for a sustained period of weaker defense budgets.
And so it begins..
The first of many such announcements.
The Big Shrug has begun.
Oh my GOSH, suppose Obama has some explaining to do?/sarc
Think the Media knew this before the election?/sarc
Think we need a Supreme Court interpretation on the "Label Disclosure Act" for products to extend to Candidates and all Media outlets?/s (if that is what the label disclosure is called)
North Virginia is going to basically morph into what the District of Columbia looks like....because nobody is going to have a high paying job or will be able to afford living there.
Gonna be a lot of desperate people out there very shortly.
Ugly has arrived.
This is what they asked for.
What’s that saying...oh yeah now I remember..Elections Have Consequences
This would have been announced over a month ago, but Obama told all the union shops and other companies to hold off on notifying people about layoffs until after the election.
Nevermind the fact that, law requires a timely and multi month notification of layoffs.
That some management took an early hit is a bad sign. When it hits the union gimps, they’ll be awoken to a hell of a sad reality.
DOD probably provided 50% of California’s wealth since the 2nd WW. Those times are gone.
DING DING DING!!!! You hit it Annie...... they need disclosure labels a la prop 37!!! We need to know what’s in the BS the media feeds us!
“This is what they asked for.”
Well they can enjoy the free birth control.
I’m as Serious as a heart attack on that one. I do believe that something needs to be done about FULL DISCLOUSURE from the Media, and before any election takes place, or they can be held accountable via class action lawsuit.
“This would have been announced over a month ago, but Obama told all the union shops and other companies to hold off on notifying people about layoffs until after the election.”
Boeing unions were a big deal since they didn’t like the idea of a SC plant.
The furthest west I stayed loyal to was Arizona. It dried up.
I did bid on contracts in SD.
My wealth tripled in Tennessee. North Carolina is now my place of residence and the work is non-stop. DOD and civilian.
We should be able to sue... after all we PAY to view their so called service via cable! Need to file class actions on them all.
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