Boeing to make job cuts at defense unit as it looks to become more competitive

  • Boeing will lay off 50 executives at its defense and space business by year's end as it looks to streamline its oversight process.
  • The moves are focused on making Boeing more competitive and enable faster decision-making.
An employee works inside the cockpit of a C-17 Globemaster III military cargo jet being manufactured for the Indian Air Force.
Patrick T. Fallon | Bloomberg | Getty Images
An employee works inside the cockpit of a C-17 Globemaster III military cargo jet being manufactured for the Indian Air Force.

Boeing is taking further steps to restructure its defense and space business.

The maker of F-18 fighter jets, Chinook helicopters and the Ground-based Midcourse Defense missile defense system will lay off 50 executives by year's end as it looks to streamline the oversight process.

"We need to be an agile organization that is more responsive to customers' needs and committed to continually improving productivity," said Leanne Caret, CEO and president of Boeing's defense, space and security division, in a press release.

Additionally, Boeing said its military aircraft and network and space systems segments will be broken out into four smaller units. The development, global operations and Phantom Works segments will remain largely unchanged.

The move is the latest by Caret, who took the helm at BDS in early 2016, to revamp the unit. Last November, America's largest aerospace manufacturer announced it would consolidate some manufacturing operations, cutting 500 jobs over four years and shuttering two plants. In December, it said it would relocate the defense headquarters from St. Louis to Washington, D.C., to be closer to the Pentagon and lawmakers.

The moves are centered on competitiveness and growth, adds Boeing spokesman Todd Blecher.

Tuesday's announced layoffs would eliminate a middle layer of managerial oversight to enable faster decision-making and cut down on internal company bureaucracy. The goal: bring down costs, boost affordability and ultimately make the second-largest U.S. defense contractor more competitive as it vies for a number of high-profile multibillion-dollar defense contracts.

Across the sector, defense contractors are honing operations to become more nimble and thus more affordable as the Pentagon looks to rebuild the military with a close eye on cost.

The defense, space and security segment accounts for nearly one-third of Boeing's sales. In April, the company forecast the unit would rack up as much as $29 billion in sales this year, with total revenue for the company expected to be $90.5 billion to $92.5 billion.

The move Tuesday comes in the midst of a busy month for the sector. Defense Secretary Jim Mattis is meeting lawmakers this week in a flurry of hearings focused on the defense budget. On Monday evening the retired four-star general scolded Congress for failing to pass budgets on time and failing to do away with sequestration, saying "Congress as a whole has met the present challenge with lassitude, not leadership."

Next week, Boeing, other aerospace companies and officials head to France for the Paris Air Show.

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