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Boeing Reverses Course On 747 Work

Boeing Co. plans to shutter a small defense plant that had been earmarked to make parts for the 747-8 jumbo jet, adding to a tally of almost 6,700 net jobs shed since the start of the year.

The aerospace group told the plant’s workforce of the move this week, though the head of the 747-8 program said in a message to employees that it wasn’t a sign that Boeing planned to end jumbo production “in the near term.“

Boeing last year said it planned to create up to 200 new jobs at the Macon, GA facility by insourcing work on making fuselage panels for the jumbo jet, but has reversed course after cutting 747 output to just six a year and flagging it may end production altogether.

The Macon facility’s work on military aircraft is due to run out in December, and the workforce has shrunk to 120 from about 500 in 2011. The 747-8 work was due to be transferred from Triumph Group Inc., which Boeing said remains under contract for the business through the end of decade.

“We determined that there is not currently a business case to place 747 work in Macon, and the slower production rate gives us more time to make a work placement decision,” said 747-8 general manager Bruce Dickinson in the message to staff.

The Macon staff all work for Boeing’s defense unit and the company’s overall head count had already fallen by 6,659 since the start of the year to 154,709, as of its latest update on Sept. 29. Most of the 4.1% drop was focused on its commercial airplanes unit, including a mix of voluntary layoffs, attrition and some compulsory cuts. The group workforce fell 2.5% in 2015.

Ray Conner, head of the Commercial Airplanes unit, warned in February that Boeing needed to cut costs to compete with Airbus Group SE

While orders for its 737 jet are booming and the 787 Dreamliner has secured a spate of deals in recent weeks, new work on the 747-8 and the twin-jet 777 has been tougher to find, forcing Boeing to examine production rates.

Boeing said in July that it might stop 747 production, citing in part the slowdown in air cargo traffic that has dampened demand for the freighter version.

The company reports third quarter earnings on Oct. 26, with analysts expecting it may trim production rates on the existing 777 plane ahead of the introduction of a revamped model.

Boeing has 15 outstanding orders for the 747-8, including six for the cargo version, and 151 for the existing 777.

The company has rented rather than sold some 747 cargo jets to customers, and Jefferies & Co. said in a client note Wednesday that three more had been leased in the past quarter. Boeing declined to comment.

http://www.wsj.com/articles/boeing-reverses-course-on-747-work-1476895622

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