Boeing Telegraphs Layoffs in Defense, Space & Security Unit

November 7, 2012 by Jon C. Ogg

Boeing Co. (NYSE: BA) did pretty much what we expect other aerospace and defense companies to do. The company waited for the outcome of the presidential election, and now it is outlining how it will deal with the coming Fiscal Cliff. Boeing is restructuring its business around the defense components and the exact cuts are not yet known. Make no mistake, this means layoffs.

The company said that it is “rotating assignments for several executives in its Defense, Space & Security unit.” The company claims that this is demonstrating its “commitment to talent development as it continues to pursue the growth and affordability strategy it has followed since 2010.” In short, this “commitment to talent” is a notice for layoffs and/or other spending cuts.

We do not yet have a formal number on the costs, but it is well known that cutting in defense contracting almost always includes layoffs. Boeing said its Defense, Space & Security unit should end up with 30% fewer executives at the end of 2012 versus 2010. The unit’s CEO is Dennis Muilenburg and he said, “We are at one of the most challenging yet opportunity-rich times in our history. While funding for the U.S. Department of Defense is under extreme pressure, we’re innovating and expanding our core, in the U.S. and around the globe, to sustain and grow our business.”

In terms of facilities space, Defense, Space & Security is implementing a greater than 10% reduction and is looking for more over time.

Be advised that this is not the first such announcement. We do not have a formal headcount tab that will be trimmed here at Boeing. That may not be known for some time. Other layoff announcements will be coming from other aerospace and defense cuts elsewhere. Boeing Defense, Space & Security is a $32 billion business with 61,000 employees worldwide.

Now that the election results are known it is safe to assume that companies will begin preparing for government spending cuts which are, for now, mandatory in 2013 as part of the coming Fiscal Cliff.

JON C. OGG

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