Boeing announced over 12,000 Layoffs in the wake of plane cancellations and dearth of new orders.
Boeing Co (BA.N) said Wednesday it was eliminating more than 12,000 U.S. jobs, including involuntary layoffs of 6,770 U.S. workers as the largest American planemaker restructures in the face of the coronavirus pandemic.
The job cuts include more than 9,800 employees in Washington State. Boeing said Wednesday the “several thousand remaining layoffs will come in additional tranches over the next few months.”
Boeing Chief Executive Dave Calhoun told employees in an email the “pandemic’s devastating impact on the airline industry means a deep cut in the number of commercial jets and services our customers will need over the next few years, which in turn means fewer jobs on our lines and in our offices. … I wish there were some other way.”
Boeing expects 737 Max deliveries will start in the third quarter but it does not expect FAA approval until August.
Let’s move beyond airlines for a look at what’s happening.
Sorry We’re Closed
Challenger and Gray reports Retail Announces 114,327 Job Cuts, Most on Record, as More Stores File Bankruptcy.
Retailer Pier 1 Imports announced it would close all remaining 540 stores and try to find a buyer for its online business. It follows bankruptcy announcements from JC Penney, J. Crew, and Neiman Marcus.
Retailers have announced 114,327 job cuts through April in 2020, not only the highest January-April total, but also the highest annual total on record. It shatters the previous high of 100,518 cuts announced by Retailers in all of 2003.
Announced Retail Job Cuts Through April 2020
Lost and Gone Forever
This time, most of these jobs are lost and gone for years, if not forever.
Malls in general are dying.
9,300 stores closed in 2019, breaking the record of 8,000 store closures in 2018. According to Coresight Research, another 15,000 stores could close in 2020.
Fed Can Print Money But It Cannot Print Jobs
That’s a nice saying but I did not come up with it. I can find at least three instances dating back to 2010.
Don’t Worry, the Fed has Belts and Suspenders
However, I can claim a sarcastic Don’t Worry, the Fed has Belts and Suspenders
Unfortunately, all the Fed is doing is creating zombie corporations unable to survive expect with permanently low interest rates.
Grim Economic Data
- May 8: Over 20 Million Jobs Lost As Unemployment Rises Most In History
- May 15: Retail Sales Plunge Way More Than Expected
- May 15: Industrial Production Declines Most in 101 Years
- May 15: GDPNow Forecasts the Economy Shrank by a Record 42%. It’s 41.9% as of May 19.
Ripple Impacts May Last Years
The economic data has been grim and the ripple impacts may last for years.
Global COVID-19 Risk Ranges Up to $82 Trillion
To understand the total global risk, please see Global COVID-19 Risk Ranges Up to $82 Trillion
Ripple Impacts
For a detailed synopsis of the state of the economy and the ripple impacts, please see The Economy Will Not Soon Return to Normal: Here’s Why.
Anyone who expects a fast recovery out of this mess is delusional.
Mish
Air travel is down over 80%. Even if it moves to double the present levels, all the major US carriers will go bankrupt, and there will be an avalanche of parked, for-sale, recent-model planes at fire sale prices.
“Just the tip.”
“Boeing is the Tip of the Layoff Iceberg”
…
Yes.
Advance Durable Goods Report out this morning. Ugly as expected, but real action in the revisions. SIGNIFICANT negative revision for March, but also January and February … as in pre covid.
Apparently there are a lot of delusionists out there. What else explains the run up in the stock market?
Either DJT right (haha) or Congress / Federal Reserve will step in with more massive stimulus.
Stock market can’t go wrong (until it does).
“What else explains the run up in the stock market?”
The stock “market” is a very narrow measure compared to the broader economy. All it measures, is the rate at which The Fed and Junta are stealing wealth and income from productive people, in order to hand it out, by way of unearned “asset” pumping, to idle, illiterate and incompetent members of the free shit army. Covid is providing them with an excuse to ramp up the rate of theft. Hence the stock “market” is up. None of which have anything to do with “the economy.”
What else explains higher prices for something that is WORTH demonstrably less than it was just a few months ago or last year? Inflation I think it is called.
Sugar High
It’s a confidence game, just like the currency. It’s all works until one day the confidence goes away, so while some people look at the numbers to make investing decisions, most do what they “feel” is right, based on what others tell them…
Hmm, I wonder about Boeing’s pension system.
PBGC, we taxpayers will make sure they get paid after the company is parted out and the pension fund raided.
Has anyone notices that the markets are doing “great” S&P500 is only 10% off its all time high. I think that sure unemployment is trough the roof, that companies are shutting down, but really all that counts is that the market is doing great. I bet you that after the 12,000 layoffs Boeing stock will rise.
Five bucks that Trump will soon announce that everything is all right because the S&P500 is back to its March level — its all, all right! (massive sarcasm)
American Airlines plans 30% reduction of management, administrative staff…
But, since the workforce would rather just claim those enhanced benefits….
Fed finds new challenge for the economy: Workers who don’t want to come back to their jobs
Who could not see this coming? link to cnbc.com
They cited safety concerns, child care issues and the generous unemployment benefits the government has been providing.
In Spain a car plant in Barcelona is closing , a live stream of demonstrations there for whatever it is worth…
How does one of the most iconic and respected names in America end up like this? Is this because of what they teach in B-school?
They did not teach anything about this in my business school. But when I took my finance degree in 1993 there was still at least some regard for fundamentals over greedy get it all now while you can technical trading.
Boeing had probably the highest rating for safety and was an absolute model of how business could be insanely profitable while not putting short term gains for the shareholders above both safety and conditions for their workers which they viewed as part of their safety program, workers that are well paid and well educated about why they need to do the job right tend to turn out better products, and because of the nature of their product they simply could not afford to have a single plane go down because an employee did less than a perfect job. Hundreds could die over one messed up connection or weld.
What they did not see was what happens when you put equity shills and bean counters in charge of the company rather than people with aviation backgrounds. The ONLY thing those people understand is profit and how it has to be maximized at any cost, so when the nature of this business which has many craftsman type skills involved in making planes, was reevaluated to lend more automation and repurposing of existing parts onto new aircraft, even as the board kowtowed to airlines that insisted they produce planes that skirted FAA regulations on pilot retraining, Boeing went along. They should have produced a new airliner that met the efficiency standards the airlines wanted, from scratch. The 737 Max is just a recycled 737 that was introduced in 1968, and it has been a good plane till they turned it into some unworkable zombie that will not respond to confused pilots in an emergency.
I will never fly on a Boeing 737 Max, they are fundamentally flawed. They are a design nightmare that not even Government Motors could outdo for sheer Goldbergian fuck up of design by committee. Only this committee had one goal, to make more money for their shareholders. So greed killed Boeing. If the company survives now it will be defense contracts that save it. Civilian air travel is about to get so expensive it will limp along at about half the level it has for decades. And I am happy about that because I was sick to death of being nickle and dimed with fees, one ounce “meals.” Part of the reason they make you route through at least one stop and a lot of the time two or more is so they do not have to feed you. The seats are uncomfortable without nearly enough leg room, and you are basically stacked up like cordwood. Flying has become so unpleasant that it is a wonder they have done as well as they have as long as they have. Now with Covid that will change, even when Covid itself is gone people will see planes as filled with potential contagious disease.
Totally agree. They’ve run a great company into the ground just for greed.
‘… equity shills and bean counters …’
That’s exactly the output of B-Schools.
🙂 That is the majority of what they turn out, young people chasing a degree so they can have a higher income. But a few good ones still trickle out, my degree in Finance for example, but I feel like a special case because I have a lot of life experience in several industries, and went back to college late for my degree, as well as having been military which if you are not a veteran you just cannot know how much that experience teaches you.
Mismanagement bordering on corporate malfeasance.
Well if Delta is scrapping 18 of their Boeing 777 fleet early, that ought to tell you something about new aircraft sales.
What’s interesting about that is airplanes get put into storage.
So it you have 500 surplus aircraft you will have to fill those airplanes up before getting any new orders. The older aircraft will also be kept in service for longer witch exasperates the problem.
Boeing will lose years of new orders. Outlook dim.
Good thing the car manufacturer don’t have rental companies going bankrupt. That would be a real disaster.
Central Banks realized they could not continue the charade any longer,so they decided to basically put the entire planet in defacto Chpt 11 so this Corona bs was hatched to use as cover/excuse call it what you will,bottom line CB’s and politicians put the whole in bankruptcy so they can buy everything on the cheap,including you guessed it…..Boing!
The tip of the iceberg passed some time ago. At last count it was what, 38 million?
People love to shop and eat out. Landscape is changing, but people love to shop. Great time to get a low cost lease. Time to dust off my smoothie shop business plan.
You can sit and be scared or realize that opportunity is everywhere.
Yes they do. One problem is they have to have it to spend it.
Hope you will except EBT.
Nikki Haley was on the board of Boeing when they were cutting corners designing crashable airplanes. OTOH, Saudi Arabia put in a larger order for the planes, where crashability was a desired feature. Go figure.
After Hunter, it seems like being a board member is something of a joke. I presume Hunter and Nikki both know nothing about the industry of which they have been a board member of.
like somebody said on Seeking Alpha : an economy that cannot even allow stocks to decline will be too fragile to survive at one point…..ain t that fckn spot on ?!
This is not stock market analysis, never confuse economic analysis with the stock market.
From an investment standpoint Boeing’s outlook is not good long term.
“Does any of this analysis matter?”
I think@Mish ‘s analysis is insightful and I know I appreciate it, but clearly it does not predict how the stock market will perform. As I recall, Mish has previously stated, “The stock market is an indicator of current sentiment and nothing else.”
Considering people being paid more to sit on the couch than to work, $1200 checks going out to taxpayers, states re-opening now with businesses supposedly all to be humming again soon, and safe and effective vaccines in development around every corner, mainstream financial sentiment has lately been a freight train of positivity.
No economic analysis by Mish or the things you mentioned have anything to do with the “mainstream financial sentiment has lately been a freight train of positivity.”
It’s nothing but “don’t fight the Fed”
It’s nothing but “don’t fight the Fed”
To the extent the Fed controls sentiment I agree with that. I think they can manage it as long as unemployment is seen as temporary, people are being paid well not to work, and vaccine prospects look good. Hence, I mentioned the things I did.
Clearly Mish’s recent economic analysis has not been positive and I do not think I suggested that. I do recall he said the stock market is correlated to current sentiment, but I may have paraphrased him somewhat incorrectly. I think today’s sentiment assumes quick economic recovery and that depends on the things I mentioned. The Fed’s promise to buy everything would not have a credible effect on markets unless that were true. If sentiment became much more negative because of undeniable long term economic problems, then I do not think the Fed would win this.
Drink the Koolaid?
Maybe it’ll be fun, maybe it’ll be:
“And one by one dropped the revelers in the blood-bedewed halls of their revel”
We shall see…
Poe-etic justice
I worked at Boeing El Segundo for 2 years. They are known for ramping up and then laying everybody off, been doing it for decades. I don’t know if Boeing is a accurate barometer.
I do see that gas prices and traffic are picking back up. Not like February but much more than April!
Mish, I’m only going off common sense here but that dictates that some jobs are going to snap back immediately, like dentists, hair salons, etc. Others will be on PPP until they decide in August if there are enough bodies present to justify employment levels. Does that predict more of a wavy recovery, than a letter shape?
I pay close attention to Vegas, I have friends and family there and I happen to have a buddy going June 4th, opening day. The city has said they will not have all the “bells and whistles” up in June, however bookings in the 3rd and 4th quarter are still strong. I am employed, I’m a comped Mlife member, and I will be there sometime this year. I imagine many others will too, people love enjoying themselves!
1000 Free One-Way Flights (Sponsored By The D Las Vegas) to Las Vegas On Various Airlines For Select Dates in Early June 2020 now Expired link to thed.com
PPP only lasts 8 weeks. We are already in week 6. Expect more layoffs in late June or early July.
Remember a lot of people are enjoying extended Unemployment benefits so living the good life assuming they will be rehired. And some are being rehired but even if 10% are not, that is a lot people not spending money and other companies using this as an opp to reduce wages. A lot of sh*&^ to hit the fan.
Because it works for me it must be great for everyone. Seems to be the mantra of the stock market currently…
TikTok is hiring 40K people globally. Why make airplanes if you can make dance videos.
Mish should also join TikTok.
Are we on the right side of the V shaped recovery yet?
The alphabet needs another letter for a deep dive. Maybe an Egyptian hieroglyph ibis with an arrow shot across the neck.
Whats the line from WC were are not at the end but we are at he end of the beginning….or something like that!
I think we are on the top of the Z.
Foreslash
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No right side at all