Boeing internal memo sets details of engineer layoffs in 2017

SEATTLE Boeing Co (BA.N) warned on Tuesday that it will conduct involuntary layoffs of engineers, part of a cost-cutting drive as the aerospace and defense company responds to increasing competition amid slowing aircraft sales.

The reductions, disclosed in an internal memo seen by Reuters, also include dozens of job categories eligible for voluntary layoffs in Washington state, southern California and South Carolina.

Boeing did not indicate the number of reductions the company planned. Vice Chairman Ray Conner and Commercial Airplanes Chief Executive Officer Kevin McAllister said last month that Boeing would continue job cuts in 2017. The company slashed employment by 10,828 jobs last year. About two-thirds of those reductions were in Washington state.

“While we have made good progress, more changes are needed to ensure our long-term future,” John Hamilton, vice president of engineering at Boeing Commercial Airplanes, wrote in the memo.

“We continue to operate in an environment characterized by fewer sales opportunities and tough competition.”

The announcement came as Boeing teamed up with a new lobbying group on Tuesday to defend $8.7 billion of tax breaks in Washington state granted to the aerospace industry in 2013. The new group opposes efforts to tie the incentives to Boeing employment.

The engineering layoffs are part of a larger reduction at the company’s airplane unit.

“Once plans are finalized across other functions, that information will‎ be shared with employees,” Boeing spokesman Doug Alder said in an email. “Each function will determine its own plan.”

The engineering reductions will take place in stages. Voluntary layoff invitations are being sent Jan. 13 and will take effect April 21. Notices for involuntary reductions will be sent Jan. 20, with layoffs planned for March 24.

Boeing plans two more rounds of engineering layoffs later in the year “driven by our business environment and the amount of voluntary attrition,” Hamilton said in the memo.

(Reporting by Alwyn Scott; Editing by Sandra Maler and Bill Rigby)