Aviation giant Boeing Co. laid off more than a hundred workers in the region this week, as the company continues to grapple with serious manufacturing problems on marquee planes, costly labor strife and deep financial woes.
Boeing notified 111 mechanics of the layoffs on Thursday, according to DeLane Adams, a spokesman for the International Association of Machinists and Aerospace Workers. The employees left work Thursday, but will be paid through Jan. 17.
The layoffs were mostly due to Boeing delaying production on the long-range widebody 777X commercial jet, Adams said. Workers in the St. Louis region build component parts for that plane.
Boeing said the layoffs were needed to align with its “financial reality and a more focused set of priorities,” said company spokesman Kurt LaBelle.
Most of the laid-off workers are expected to leave the company in mid-January, LaBelle said Friday. Eligible employees will receive severance pay, help finding a new job and health care benefits for up to three months.
Adams said some of the workers might be called back.
The decision to lay off workers doesn’t make sense, said Richard Aboulafia, managing director of AeroDynamic Advisory, an aerospace industry consulting firm. Citing “resource issues,” Boeing has struggled to get its production plans across the finish line, he said.
“I would have thought they would be needing more resources to execute on troubled programs, not less,” Aboulafia said. “They’re all very badly troubled.”
Boeing claims about 16,700 workers in its defense business in the St. Louis area.
Months of warning signs preceded the layoffs.
In September, the company warned of “significant reductions” to supplier spending and a stop to most purchase orders on the 737, 767 and 777 planes. That same month, 33,000 machinists at Boeing voted to go on strike amid bitter negotiations. The strike lasted seven weeks.
Then last month, new Boeing CEO Kelly Ortberg said the company planned to cut 10% of its workforce, or about 17,000 jobs. And it would further delay the launch of the new 777X, and discontinue the 767 cargo plane.
Company officials didn’t specify how business conditions would affect St. Louis workers, but it warned of cuts.
“Our business is in a difficult position and it is hard to overstate the challenges we face together,” Ortberg said in a letter to employees.
Ortberg, longtime aerospace executive, took over the troubled company in August and is its third CEO in less than five years.
He faces challenges in turning the company around.
Boeing reported a loss of more than $6 billion in its third quarter. The company’s commercial side faced scrutiny from the Federal Aviation Administration after a panel blew out of a 737 Max during an Alaska Airlines flight in January.
And the company suffered another blow when NASA decided that a Boeing spacecraft wasn’t safe enough to carry two astronauts home from the International Space Station.
The state of Missouri has given Boeing $129 million over the past 10 years in exchange for the company maintaining and growing jobs here, according to a Post-Dispatch analysis of state tax records. The fewer jobs Boeing has, the less in tax breaks it receives.
St. Louis County last year approved a new set of tax breaks on a new $1.8 billion assembly plant.
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