Bloomberg News

Boeing Says Defense Furloughs Possible Should Shutdown Drag on

October 12, 2013

Boeing Co. Aircraft

Boeing Co., based in Chicago, said Oct. 4 that it expected furloughs as soon as this week and would continue working with customers and suppliers to maintain normal operations. Photographer: Andrew Harrer/Bloomberg

Boeing Co. (BA:US) said it may furlough workers at its defense, space and security unit should the U.S. government’s partial shutdown continue.

Workforce reductions could be triggered by customers issuing stop-work orders, limited access to federal installations where its employees work, funding cuts or a shortage of government inspectors, Dan Beck, a Boeing spokesman, said in an e-mail yesterday. He declined to say how many employees may be idled.

The unit accounted for about 40 percent of Boeing’s $81.7 billion in 2012 revenue (BA:US). The partial closing of government operations began Oct. 1 with furloughs of about 800,000 federal workers. Federal agencies award more than $500 billion a year, or a rough average of $1.4 billion a day, to tens of thousands of contractors.

Large contractors, such as Boeing, whose workers deal with many shuttered agencies, are feeling the effects of the stoppage even after the Pentagon recalled about 90 percent of its 350,000 furloughed employees on Oct. 5, said Howard Rubel, a New York-based defense and aerospace analyst with Jefferies LLC.

“It’s no different from the paper boy,” Rubel said in a phone interview. “If the guy you’re giving the paper isn’t paying, why are you delivering it?”

Boeing, based in Chicago, said Oct. 4 that it expected furloughs as soon as this week and would continue working with customers and suppliers to maintain normal operations.

To contact the reporter on this story: Julie Johnsson in Chicago at jjohnsson@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net


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