Douglas Will Lay Off Up to 4,000 in Long Beach : Defense: The cutbacks are part of a plan by the debt-laden firm to slash operating costs $700 million a year.
McDonnell Douglas said Thursday that it will lay off 2,000 to 4,000 workers at its Douglas Aircraft subsidiary in Long Beach as the result of a previously announced effort to reduce operating costs by $700 million a year.
When the cost-cutting program was disclosed last week, the St. Louis-based aerospace firm said several thousand jobs would be affected at the Long Beach operation. The total number of layoffs across the corporation resulting from the cost-savings program is still not known, but it has been estimated at about 10,000 workers.
As a part of cuts announced earlier, Douglas Aircraft had already begun layoffs of another 4,000 regular employees and 3,000 contract workers. The savings from those layoffs were included in the $700-million cost-cutting effort that McDonnell announced last week. The additional layoffs will mean that about 10,000 workers will lose their jobs at Douglas this year.
The cutbacks started when employment at Douglas Aircraft in Long Beach and at a related parts-fabrication plant in Torrance totaled about 45,000. In addition, Douglas has plants in Salt Lake City; Columbus, Ohio; Macon, Ga., and Toronto.
The corporate-wide cutbacks were mandated by Chairman John McDonnell last week, following a dismal financial performance over the past year and a somewhat risky outlook for the future. The company has run up debt of $2.5 billion and is expected to hit $3 billion in debt by the end of this year under the most favorable scenario. McDonnell has even raised the possibility that debt could reach $3.7 billion by early next year.
At beleaguered Douglas, each of three major aircraft production and development programs is running behind schedule, adding to cost, holding down revenue and monopolizing management attention. The unit is struggling to cope with a variety of basic ills.
In an effort to improve financial performance and staunch losses, McDonnell said last week: “The hard reality is, we must begin immediately to take further strong actions to reduce our costs.”
When the layoffs were announced last week, company officials said they would include all types of workers but that the job reductions would be concentrated in support and overhead areas. That would include administration, planning, engineering and related areas. In addition, travel, overtime, advertising and the use of consultants are to be trimmed.
The figures for Douglas Aircraft are the first to be disclosed for any of McDonnell’s nine divisions. Assuming that 3,000 workers are cut at Douglas, that leaves 7,000 workers to be cut from McDonnell’s other operations, which include large plants in Huntington Beach, St. Louis and Mesa, Ariz.