Boeing to Cut More than 6,500 Jobs in St. Louis

Boeing Co.’s recovery from two years of financial troubles suffered a setback Thursday as the aerospace company said a decline in orders for its F-15 fighter plane will force the elimination of 6,500 to 7,000 jobs.

The job cuts will all take place at the company’s massive St. Louis manufacturing operation and will represent about 35% of the work force there. The cuts will come from the ranks of management and union members and are expected to be completed by mid-2001.

Boeing’s decision comes two weeks after the Greek government signed a contract to buy Lockheed Martin Corp.’s F-16 rather than Boeing’s F-15. The F-15 costs about $55 million each, while the F-16, an advanced fighter, goes for about $30 million.

After Boeing lost that $3.5-billion sale, the Israeli government postponed a $2.5-billion F-15 purchase. A top Israeli defense official said Israel’s air force recommended in a closed-door meeting that the government award Lockheed Martin a $2.5-billion fighter plane tender.

Boeing is the largest industrial employer in Southern California. It has none of its F-15 production in the region, although suppliers will be affected by the cutbacks.

The Greek order alone could have kept the Boeing line going for two years. As it stands, current orders for the F-15 will be completed by early 2000.

“Once we completed an assessment of our business environment based on the April 30 decision by the government of Greece, we decided to let our team and the community know as soon as possible what to expect for the foreseeable future,” said Jerry Daniels, Boeing vice president, general manager and St. Louis site director.

“We remain committed to St. Louis and are taking these steps to ensure our competitiveness on our existing work, including a multiyear contract on C-17 and a proposed multiyear buy of the FA-18EF and on future programs, such as the joint strike fighter.”

Layoffs of between 800 and 900 St. Louis workers were announced earlier. About 300 of those already have been given notice, officials said. About 300 to 400 workers are to be let go every month until the reduction is complete.

The F-15, first manufactured in 1972, is one of the oldest and best-known fighter planes.

More than 1,500 F-15s have been delivered to the U.S. Air Force, Israel, Saudi Arabia and Japan.

Peter Jacobs, a Boeing analyst at Ragen Mackenzie Inc. in Seattle, said the production declines in St. Louis will hurt Boeing’s revenue in 2000 and 2001, but the company may also face a longer-term problem rehiring skilled workers after that.

Boeing will need these workers as it ramps up production of the F-18 Super Hornet, a new carrier-based fighter that is being built in St. Louis, Jacobs said.

“One of the challenges Boeing will now face is getting the skilled work force to come back when they’re needed,” he said.

Jacobs said the F-15s are at the tail end of their delivery cycle.

“Even if Boeing would have won the order from Greece and got the full order from Israel, it would probably have still resulted in job reductions in St. Louis,” he said.

Boeing, which had a work force of 238,000 in July, has previously said it planned to eliminate 43,000 to 53,000 jobs in coming years. The company said Thursday’s announcement pushes its estimate to the higher end of that range. Boeing now employs 219,000.

Boeing has blamed most of its job cuts until now on reduced demand from Asian customers that were suffering from that region’s prolonged recession. Most of the previous cuts came in the Puget Sound area in Washington.

There was a bit of good news for Boeing on Thursday.

The company said it agreed to protect nearly 3,600 maintenance and facilities jobs that had been scheduled for elimination in the Puget Sound area. The company said it saved those jobs after union workers agreed to productivity improvements.

Shares of Seattle-based Boeing rose 25 cents to close at $42.81 on the New York Stock Exchange.