SEATTLE (Reuters) - Boeing Co (BA.N) said on Wednesday that it would stop making its distinctive-looking C-17 military transport plane in 2015 because of faltering sales, and would lay off up to 3,000 employees involved in the 30-year-old program.
The decision will close the last major aircraft production plant in Southern California, and Boeing said it has no plans to move other production, either commercial or military, into the vacated space.
The Chicago-based aerospace company said it would take a charge of less than $100 million in the current quarter to halt C-17 production in Long Beach, California, and facilities in Macon, Georgia, Mesa, Arizona and St. Louis, Missouri. It said the charge would not alter its forecast for full year earnings.
The company said it will try to place employees elsewhere in the company. The move also affects more than 650 suppliers in 44 U.S. states, who employ about 20,000 people, Boeing said.
Boeing plans to start reducing the workforce in early 2014, and has 22 more of the planes to produce, though 13 of those are not yet sold. It has delivered 257 of the jets so far, of which 223 went to the U.S. Air Force.
“We do anticipate that the job reduction required by this will be moderated to some extent by redeployment to other programs,” said Nan Bouchard, vice president and C-17 program manager, said in a conference call.
She said most of the layoffs will start in mid-2014 “as the last aircraft moves through the facility.”
The potential end of production had been signaled when the U.S. Air Force stopped ordering the bulky, four-engine jet, capable of carrying tanks, heavy machinery and medical supplies around the globe. Foreign sales failed to make up for the loss of U.S. military orders, and the Air Force took delivery of its final new C-17 last week.
“Our customers around the world face very tough budget environments,” said Dennis Muilenburg, chief executive of Boeing’s Defense, Space & Security division, in a statement.
“While the desire for the C-17’s capabilities is high, budgets cannot support additional purchases in the timing required to keep the production line open.”
Reporting by Alwyn Scott; Editing by Bernard Orr