Faced with shrinking U.S. defense spending, aerospace giant Boeing (NYSE:BA) plans to pull the plug on its Wichita, Kan., plant, impacting more than 2,000 employees.
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Confirming earlier reports, the Chicago-based blue-chip company said the closure will occur by the end of 2013, but it doesn't expect job cuts to take place until early in the third quarter of 2012.
The Wichita facility, which has been building aircraft since 1929, is part of Boeing's defense, space and security apparatus, or BDS. Employing more than 2,160 workers, the plant had been the company's base for its global transport executive systems business as well as its B-52 and 767 International Tanker programs.
However, the facility had been hit with program closures and the winding down of contracts over the past five years.
"The site does not have enough sustainable business on the horizon to create an affordable cost structure to maintain and win new business," Boeing said in a statement.
Boeing said future aircraft maintenance, modification and support work will be conducted at its San Antonio facility. The transitions to the new facility will begin in the coming months.
"We recognize how this will affect the lives of the highly skilled men and women who work here, so we will do everything possible to assist our employees, their families and our community through this difficult transition," said Mark Bass, vice president and general manager for BDS' maintenance, modifications and upgrades division.
Boeing said it will provide workers with retirement seminars, job search resources, financial counseling and help finding work inside or outside of Boeing.
Due to concerns over the government’s bloated budget, the U.S. military is facing an extra $450 billion plunge in spending through 2021. The loss of that revenue is likely to decrease military orders for pricey aircraft and other technology manufactured by Boeing, Lockheed Martin (NYSE:LMT) and other defense contractors.
"In this time of defense budget reductions, as well as shifting customer priorities, Boeing has decided to close its operations in Wichita to reduce costs, increase efficiencies, and drive competitiveness," said Bass.
Boeing said despite the Wichita closure, it values its long-term partnership with Kansas, where it spent more than $3.2 billion with about 475 suppliers last year. Bass said the company anticipates "even more growth" for suppliers in the state, based on current projections.
Shares of Boeing were recently off 0.19% to $74.08, mirroring slight declines in the broader markets.