Boeing Co. on Friday said it will cease ordering parts for C-17 military cargo jets that are not under contract or firm commitments, a step that could mark the end of the aircraft’s production altogether.
The company said without further C-17 orders from the Pentagon or foreign buyers it expects to begin reducing the size of its work force as early as 2008, and complete the shut down of production facilities by mid-2009.
Boeing has notified suppliers who employ more than 7,000 workers in California, Missouri, Georgia and Arizona. There are roughly 25,000 U.S. jobs tied to the C-17.
Boeing is under contract by the Air Force for 190 C-17s. The last plane is expected to be delivered by October 2009.
This is the second time Boeing has threatened to halt production of the C-17. Last year, the company went so far as to hold a supplier day on Capitol Hill to lobby members of Congress for continued support.
Swayed by the potential loss of tens of thousands of jobs, lawmakers agreed to designate an additional $2 billion to buy 10 more C-17s in its fiscal 2007 budget on top of the 12 that had been initially requested by the Air Force.
“We had hoped to keep the production line active and viable to protect this important national asset affordably while the U.S. government completed its decision process on the future of the C-17 program, especially in light of the current concerns over the aging C-5A,” said Dave Bowman, vice president and C-17 program manager for Boeing, in a statement.
The aerospace manufacturer said due to a 34-month lead time in building the military cargo jet, the company needed a commitment to avoid a break in production.
Boeing needs 12 new plane orders a year to keep the C-17 production line running, according to aerospace analyst Richard Aboulafia of Fairfax, Va.-based Teal Group Corp.
Shares of Boeing dropped 27 cents to $87.58 in afternoon trading on the New York Stock Exchange.