Boeing will cut 10,000 jobs, more than half locally

Boeing this year will cut about 6 percent of its workforce, roughly 10,000 jobs in all, company officials said today.

At least half of those will be in Washington state, including the 4,500 job cuts in the Commercial Airplanes unit that Boeing announced earlier this month.

The news came along with Boeing's quarterly earnings results, which also determined company incentive payments due next month. Though Boeing failed to meet pre-set profit goals, about 48,000 employees in the state — not including the Machinists — will receive six days' extra pay in mid-February, for a total of more than $97 million.

The further 5,500 job cuts announced today will affect the defense division and the corporate support services unit and will be spread nationwide.

"Some of them are in Washington state," said Boeing Chief Executive Jim McNerney in a conference call.

Boeing employs more than 13,000 people in Washington state outside the Commercial Airplanes division.

So the proportional cuts in other divisions should be roughly another 800 job cuts in the state, bringing the total cuts here to more than 5,000 jobs.

In a sobering teleconference, Boeing announced a $56 million loss for the fourth quarter of 2008, compared to a $1 billion profit for the same quarter in 2007.

Attributing the loss to two heavy fourth-quarter charges — one due to the Machinists strike and the other to problems on the 747-8 development program — McNerney nevertheless offered assurances that Boeing is positioned to weather the economic crisis better than most companies.

The Machinists strike last fall, which also hit the third-quarter results, had a fourth-quarter impact of about $1.2 billion.

Additional engineering and supplier expenses on the troubled 747-8 airplane program added another $685 million hit.

The Commercial Airplanes unit operating loss for the quarter was $968 million, compared to a profit of $973 million a year earlier, reflecting the strike and 747 charges.

Boeing's overall profits came in lower than internal target levels set by management, so that the 2008 Employee Incentive Plan (EIP) will pay out only six days of extra pay in February — instead of 10 days for meeting the targets or up to a potential 20 days if the targets had been exceeded.

White-collar workers participate in the EIP, but in contract negotiations in the fall the company and the Machinists union failed to agree on inclusion of the blue-collar workforce. Companywide, Boeing will pay out next month about $220 million in EIP payments to 114,000 eligible employees.

The good news from the teleconference was that Boeing sees a return to profitability in 2009.

With the labor problems behind him, McNerney said Boeing is now on track to meet the delayed schedules for its two big airplane development programs — the 787 Dreamliner and the 747-8.

He said Boeing expects to hold production at current levels through this year and to deliver 480 to 485 airplanes. McNerney said that the company has enough over-bookings to maintain that production schedule even if cacnelations and deferrals spike as expected.

He said the first major 787 cancelation will be announced tomorrow, with an order for 15 of the Dreamliners wiped from the order book.