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Thu February 21, 2013
Boeing plans more defense cuts as U.S. budget shrinks
Boeing executives say they’re cutting costs out of the defense side of their business to cope with shrinking U.S. military spending.
Here in the Puget Sound region, we associate Boeing with commercial jets. But the company has a massive defense business making everything from radar systems to fighter jets. That side of the business has trimmed billions of dollars in recent years because of declining U.S. military spending.
Dennis Muilenburg heads Boeing’s defense business. He told investors at a Barclays conference that no matter what happens with the across-the-board reductions known as the sequester, cuts are coming. So Boeing is trimming another $1.6 billion out of its defense business in the next couple of years, according to spokesman Todd Blecher.
"You know, over the last two years, we’ve come down about 9,000 people in the defense side of Boeing out of a roughly 60,000 person workforce. Those have been tough actions," Muilenburg said. "But about 8,000 of those people have ended up in Boeing Commercial Airplanes as they’ve been ramping up."
A Boeing spokesman declined to say how many more defense-side jobs will be cut.
Muilenburg says he hopes Congress will be able to come up with an alternative to the sequester, so that the Defense Department can prioritize cuts. If that happens, he says Boeing contracts should fare well.
"We have programs executing on cost and schedule and those are the kind of programs that survive," Muilenburg said.
Muilenburg says one bright spot helping to offset the declining U.S. budget is demand from overseas for military equipment. Boeing recently delivered the first of 10 C-17 airlifters to the Indian Air Force. Those are large planes made in Long Beach, California, that can carry tanks and troops.
Muilenburg says international customers right now make up 41 percent of Boeing’s defense backlog, which totals about $71 billion.