Boeing Co said it would close a plant in Wichita, Kansas, by the end of next year that employs more than 2,160 workers maintaining and converting planes for the military, part of a move to cut costs as the US defense budget tightens.
The decision announced on Wednesday drew a bitter reaction from Kansas politicians, who felt Boeing had betrayed commitments to the state and their efforts to help the firm win a big refueling aircraft contract from the US Air Force.
The Wichita plant is the base for the company’s Global Transport & Executive Systems business, which supports the US Air Force’s executive fleet, and its B-52 and 767-based aerial tanker programs.
The first job cuts are expected in the third quarter. Boeing said it still expects to make purchases worth billions of dollars with Kansas-based suppliers.
Work on the 767-based KC-46 tankers, picked last year as the new refueling aircraft for the US Air Force, will be relocated in Puget Sound, Washington.
Other aircraft maintenance and engineering work is moving to Texas and Oklahoma.
Kansas Governor Sam Brownback, said the move was disappointing, especially since he and other Kansas officials had worked hard to support Boeing through its 10-year battle to win the refueling plane contract.
US Representative Mike Pompeo said Boeing clearly had the right to change its business plans and operate in the best interests of its stakeholders, but the company was breaking “years and years of promises” to the state.
Boeing had said the new tanker would add 7,500 jobs in the state.
US President Barack Obama and Congress, in an effort to get control of the government’s huge deficits, agreed last year on a budget deal that could cut projected defense spending by more than US$1 trillion over the next decade.
“In this time of defense budget reductions, as well as shifting customer priorities, Boeing has decided to close its operations in Wichita to reduce costs, increase efficiencies and drive competitiveness,” said Mark Bass, vice president and general manager for the Maintenance, Modifications & Upgrades division of Boeing’s defense business.
The company did not give an estimate for cost savings or expenses associated with the move.
The closure comes at a tough time for the US economy, which shed 7.5 million jobs during the 2007 to 2009 recession and has regained only 1.2 million of them through November despite growth in the country’s population.
Boeing shares, down earlier on Wednesday after the announcement, ended slightly higher, closing up US$0.11 at US$74.33 on the New York Stock Exchange.