Boeing Co on Monday told its workers that it expected to cut as many as “several hundred” jobs in its satellite business through the end of this year, due to a downturn in US military spending and delays in commercial satellite orders.
Multiple commercial orders were being delayed by recent failures of launch vehicles and uncertainties about the future availability of financing from the US Export-Import Bank (EXIM), whose government charter lapsed on June 30, the company told key managers in an internal communication.
Boeing spokesman Tim Neale confirmed the reductions and said the total number of people affected would be finalized in coming months.
Photo: Bloomberg
Some could find work in other parts of Boeing, Neale said.
He said the reductions were “necessary to remain competitive for ongoing and future business.”
The Boeing announcement marks the latest fallout from the ongoing debate about the future of the bank and the US government’s export credit agency, which can no longer write new loans and trade guarantees.
US government officials have said they are growing more concerned about the impact of the bank’s forced shutdown on a wide range of US companies, including many small businesses.
Tea Party conservatives in the US Congress did not vote to renew the agency’s charter, saying that the trade bank provides “corporate welfare” for big companies like Boeing and General Electric Co.
Business executives said it was unclear if the bank would be reopened.
EXIM backers say the bank generates revenue for the US government and helps level the playing field for US companies whose rivals in other countries receive similar trade credits.
Boeing does not break down workforce numbers for separate business units, but the company has about 16,800 workers in California, where it builds satellites and does some commercial airplane work.
The announcement came a little more than a month after commercial satellite provider ABS canceled a large satellite contract with Boeing due to uncertainty about the future of the bank.
Neale said Boeing officials were still working with ABS, based in Bermuda and Hong Kong, to find an alternate financing solution, but ABS was in active discussions with other satellite makers that had access to government trade credits.
He said many of Boeing’s international customers relied on EXIM financing to buy commercial satellites and airplanes, and uncertainty about EXIM’s future was making those buyers “very nervous.”
“In the absence of EXIM, Boeing may need to serve as the lender of last resort, but there are real limits to how much of this the company can do,” Neale said.
Boeing said it expects China’s aviation industry to withstand the turbulence in financial markets and forecast the nation’s carriers will almost triple their commercial aircraft fleet over the next two decades.
The plane fleet in China will surge to 7,210 by 2034 from 2,570 last year, Boeing said in a statement distributed in Beijing yesterday.
The Chicago-based company also forecast China needing 6,330 new planes worth US$950 billion in the next two decades.
“Despite the current volatility in China’s financial markets, we see strong growth in the country’s aviation sector over the long term,” Randy Tinseth, vice president of marketing at Boeing’s commercial airplane unit, said in the statement.
China is also forecast to become the world’s biggest air travel market, according to Boeing.
Boeing estimates single-aisle jets will account for nearly three-quarters of future demand, while low-cost carriers will account for as much as 30 percent of China aircraft demand by 2034, up from the current 8 percent.
Additional reporting by Bloomberg
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
RSS