Boeing Announces Plan To Close Kansas Plant (NYSE: BA)
Boeing has announced plans to close its military aircraft plant located in Wichita, Kansas and lay off the plant’s 2,160 employees. The layoffs are scheduled to begin in the third quarter of 2012. Company officials say that the actions are the result of cost cuts at the Pentagon. The announcement by Boeing is the latest in a string of job cuts and plant closings by military contractors.
1,400 of the jobs will be shifted to San Antonio, Oklahoma City, or the Seattle area, by transferring workers from Wichita or hiring new employees. 800 engineering and project management jobs will be moved to Boeing’s plant in Oklahoma City. 300 to 400 modification and maintenance work employees will be relocated to San Antonio. 200 jobs related to the tanker project will be moved to Washington. The rest of the positions will be eliminated.
Politicians in Kansas expressed anger about the job cuts and the plant closure, saying that it was a betrayal of promises made last year by the company when they helped the company win an Air Force contract for aerial refueling tankers worth $35 billion. Senator Jerry Moran, Republican of Kansas, said that he was “outraged” that Boeing was moving the work to Washington State.
He said, “It is hard to believe that conditions would have changed so rapidly over the past few months to bring about the decision to not only move the tanker finishing work elsewhere, but to also close down the entire facility. The fact that Boeing is now refusing to honor its commitment to the people of Kansas is greatly troubling to me and to thousands of Kansans who trusted that Boeing’s promise would be kept.”
Defense Secretary Leon E. Panetta has been charged with creating plans for the Pentagon to adjust its war strategies and weapons programs to save $450 billion or more over the next 10 years. Mark Bass, a vice president for a division in Boeing’s military business, told reporters that the plant was too large and inefficient to be competitive as the cost cuts at the Pentagon start to affect business.
Mr. Bass said labor costs at the plant were higher than at rival sites. The plant has 97 buildings and stretches across two million square feet of space. The plant competes for maintenance work with smaller companies that can operate out of two aircraft hangars. A study by Boeing concluded that the plant’s business “would continue to erode.”
Boeing’s other contracts for modifying and maintaining military aircraft are nearing their end. Company officials said some of the modification contracts, for airborne command and logistics-support planes, were ending, and plans for updating B-52 bombers had not materialized as expected. Boeing is now planning to finish assembling the giant refueling planes in Wichita. The president’s planes, known as Air Force One, are maintained by Boeing at the Wichita plant.