Boeing has embarked on a strategy of deeper-than-expected cuts to teams responsible for the company’s strategy, halving the number of planners working in key divisions as it redirects energy to address industry pressures, sources familiar with the matter said.
The move is the latest evidence of renewed industry priorities, after Boeing named Stephanie Pope to the new role of chief operating officer on Monday, putting the 51-year-old global services director in line to succeed Dave Calhoun as chief executive.
Boeing is grappling with its supply chain at a time when it is saddled with nearly $40 billion in debt stemming from a drop in travel due to Covid-19 and a safety crisis spawned by two 737 MAX plane crashes.
But some critics worry that the company’s increased operational focus is diverting management’s attention from the long term at an important time for the industry. The company is expected to send layoff notices this week to strategists affected by the plans, the sources said.
In November, Boeing said Marc Allen, once considered the next CEO, would step down as chief strategy officer and part of its planning team would be reassigned to other divisions.
In a Nov. 16 memo, Calhoun said this involves “empowering and empowering our business units,” with strategists “joining directly into the business units they support.”
However, sources say these units are facing cuts of at least 50% in the number of strategists who work daily at Boeing Global Services and Boeing Commercial Airplanes. The total number of affected employees is not known.
Demonstrating the speed of change, some strategists are being told not to return to work when the 60-day deadline arrives, even as they are told to look for work, the sources said.
In the defense sector, plans are evolving more slowly, but cuts of 50% or more are also expected, the sources say.
Sources say the company has about 200 strategists in total, most of whom are embedded in divisions rather than headquarters.
“We are directly aligning our strategic teams with the business units they support,” a spokesperson said, adding that this is part of broader steps taken over several years to simplify the corporate structure and focus resources on the business.
TECHNOLOGIES OF THE FUTURE
Strategy is a perennial chess game in the aerospace industry because of the stakes in terms of company size and the time it takes to master new technologies.
The decision to cut key strategic teams has already drawn criticism from analyst and longtime Boeing skeptic Richard Aboulafia. On Monday he stated that the decision and the Pope’s appointment favor the collection of past investments to the detriment of future technologies.
“If the company doesn’t have these things, how will it know where it wants to be in five or 10 years,” he said.
Not everyone was so pessimistic. A source close to the company said its divisions had long viewed the strategy department as an expensive rival and predicted it would gradually reshape itself.
Another source argued that company-wide choices regarding new technologies could be coordinated at the CEO level, as was the case in the past, without the need for an autonomous strategy department.
The move comes as the industry looks into its crystal ball at the future of single-aisle jets, aerospace’s “golden goose,” marking one of the biggest strategic choices of a generation.
Although follow-on models for these jets are more than a decade away, Airbus has already revealed a key component of its potential strategy, suggesting it may seek government support, a mechanism that helped spark a 17-year trade war with Boeing .
Sources say the company never completely stopped work on replacing the 737. But Boeing’s famed Product Strategy team will now fall under Product Development, which oversees all of Boeing’s existing and future designs and production systems, Boeing said in response to a Reuters question.
Source: Terra

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