Boeing has announced plans to cut $1.6 billion of costs in its defense division. These cuts come on top of $2.2 billion of previous reductions the company has made during the past two years. The downsizing is a strategic initiative to better position the defense division, which constitutes 40% of the entire company, in an environment of sharply reduced government spending. The decision is not related to the sequestration issue now looming over the federal budget.
The move includes significant layoffs of up to 30% of management personnel, plant closings and renegotiation of terms with suppliers. While the company will try to find places for affected employees in its growing commercial businesses, the losses will be felt in today’s listless employment market, especially as defense industry jobs tend to be among the most highly paid. Other defense contractors face similar pressures, and Boeing joins Lockheed Martin , Northrop Grumman and Raytheon, who have all been slashing costs.
Photo: Boeing Headquarters, courtesy of J Crocker via Wikipedia