Company cites general downward trend in defense budget as primary cause.
The Boeing Co. announced Thursday it will consolidate facilities in Texas and eliminate jobs, citing reduced future demand as a result of Defense Department budget cuts.
The company said that 160 positions at a facility in El Paso that produces electronic equipment would be cut. A spokesman for Boeing told Government Executive that the layoffs were occurring because of a downward trend in the U.S. defense budget environment, not specifically because of the possibility of across-the-board budget cuts on March 1 or uncertainty about appropriations.
“With or without sequestration and/or a continued impasse on the fiscal 2013 budget, the outlook for the future is for diminished demand for these products,” Boeing Co. spokesman Dan Beck said in an email.
In the company’s statement, Derek McLuckey, the director of Boeing Network Operations, said that affected employees and their families would receive assistance finding other employment, financial counseling and retirement seminars.
“This difficult decision was based on a thorough study of the current and future business environment and the need to remain competitive," McLuckey wrote.
Other contractors are bracing themselves for a drawdown of the defense budget. A guidance memo by Deputy Secretary of Defense Ashton Carter on Thursday encouraged the Pentagon to begin “[intensifying] efforts to plan future actions” regarding budgetary uncertainty.
According to Foreign Policy magazine, this has led to scheduling delays in many military programs. In an article published in The Wichita Eagle on Friday, Hawker Beechcraft, an airplane manufacturer, announced rolling furloughs for 240 employees working on military aircraft production lines because of a pricing dispute with the government. A spokesman told the Eagle that the company normally would have completed negotiations with the government, but could not speculate as to why the process was delayed.