In an effort to further streamline its
operations, The Boeing Company today announced consolidation plans
for several manufacturing areas in Puget Sound and told employees of key
defense and space programs that much of their work will remain in the region.

“We are fulfilling our promise to let employees and our communities know
as soon as possible about decisions that affect them,” said Fred Mitchell,
executive vice president and leader of the companywide asset utilization
effort.
“The steps we’re announcing today support our goals to run a healthy
business, offer stability to our employees, and enhance shareholder value.
Given normal attrition and an improved business forecast for Commercial
Airplanes — and to the extent that our employees are open to retraining for
new opportunities and internal job transfers — we expect to be able to move
all affected employees to other positions in the company.”

The moves come as part of Boeing’s ongoing efforts to focus its business
base on core competencies, reduce costs, gain efficiencies and improve
profitability.

“Today’s announcements will reduce Boeing’s facilities footprint by more
than 1.5 million square feet in keeping with our value scorecard goal of
substantially reducing overall square footage,” Mitchell added.
“This effort
has involved high-level management focus across the company, and a thorough
and rigorous evaluation based on existing business conditions.”

The consolidations eventually will affect about 3,500 Puget Sound
employees whose job assignments will transfer or otherwise change by varying
degrees over the next three years.
The company is committed to honoring all
of its labor agreements.

“We have considerable capacity challenges in our factories; some are
running at only 30-50 percent of capacity,” said Mitchell.
“Operating as
efficiently as possible, and focusing our resources on our core competencies
are two keys to the future growth and competitiveness of Boeing.
Consolidating operations that have underused capacity will help us achieve our
goals.”

Announcements made today include:

  • Boeing will move work from four sub-assembly shops within its
    Commercial Airplanes group to other suppliers inside and outside the company.
    These shops, commonly known as “lot-time,” produce bench-top-sized
    sub-assemblies used in airplanes.
    The shops are located in Harbour Pointe,
    Wash.; Auburn, Wash.; Renton, Wash.; and Wichita, Kan.
    The move will take
    about two years to complete and affect approximately 900 factory and support
    employees.

  • The company will consolidate its new-tool-fabrication activities in
    Wichita, which will become its center for new-tool fabrication.
    Support to
    production tools will continue at several locations in the Puget Sound area
    and elsewhere.
    The move primarily affects Puget Sound.
    Of about
    2,400 tooling employees there, approximately 2,050 will remain to provide
    support for production tools.
    About 350 will be retrained as necessary for
    other work.

  • Boeing will move machining and chemical processing work now done at its
    Military Aircraft and Missiles shop in Kent, Wash., to other locations inside
    and outside of the company.
    The shop’s commercial airplane work will be
    transferred to Auburn and to external suppliers.
    As currently planned, its
    military work will be moved to St. Louis.
    Movement of this work will be
    carried out over the next two years.
    About 500 employees eventually will be
    affected.

  • Except for machining and chemical processing as outlined above, work on
    the following defense and space programs remains unchanged in Puget Sound:

  • F-22
    — Joint Strike Fighter (JSF)
    — B-1B/B-2 consolidated program (currently contracted tasks)
    — C-32 and C-40
    — ALCM/CALCM Block 1A and Penetrator program (with related

engineering services)

  • Multimission Maritime Aircraft
    — Airborne Mission Systems programs, such as AWACS, 737 AEW&C,

    Airborne Surveillance Testbed, and E-6

  • Phased Array antenna activity
    — Electronic Systems ASIC and MMIC design engineers, who will provide

    continued support to Connexion by Boeing(SM), JSF, F-22, 777 and RAH-66. In
    addition, once the Hughes Space and Communications acquisition has closed,
    these engineers will provide support to the new Boeing Satellite Systems
    organization.

    • Phantom Works programs, including current-phase activity on the
      Unmanned Combat Air Vehicle.
      St. Louis will be the center for unmanned
      vehicles.

    • Commercial Avionics Systems will remain in Puget Sound and be
      relocated from Kent

    • Inertial Upper Stage will remain in Kent as a fly-out program until
      its completion

    • Boeing has decided to move certain follow-on work related to the above
      programs, including:

    • Extended Range Cruise Missile (the next phase of the ALCM/CALCM
      program) engineering and support will be located at the Weapons Programs
      facilities in St. Charles, Mo., where CALCM is manufactured and where all
      other Boeing tactical weapons are designed and produced.

    • B-1B/B-2 program management has been moved to Long Beach, Calif.,
      consistent with a prior announcement.
      Future program engineering and support
      will move to Long Beach and/or Oklahoma City when the currently contracted
      activities in Puget Sound have been completed.

    • Some future growth for Integrated Defense Systems work will take
      place in Southern California.

    • In other Commercial Airplanes consolidations, the Process Assembly
      manufacturing business unit in Auburn, which houses one of the lot-time shops,
      will be phased out of operation over the next three years.
      The group employs
      about 800 people in lot-time work and the manufacture of composite and
      thermoplastic components.
      The work will be placed at suppliers inside and
      outside of the company.

    • Commercial Airplanes also announced the move of its Renton emergent
      manufacturing or “blue streak” shop to its Emergent Manufacturing Facility in
      Auburn and its intention to move its Everett, Wash., blue streak facility to
      Auburn.
      The Renton move will affect about 120 employees and be completed by
      year-end 2000.
      The Everett move is expected to affect about 150 employees and
      be completed by the end of the first quarter 2001.

    Boeing has been studying a variety of alternatives for its space and
    defense programs in Puget Sound, Mitchell said.
    “The preferred option at this
    point is to leave much of the work in place and to focus on reducing
    infrastructure and overhead costs.
    Our plan is to streamline and align our
    business systems by providing the majority of the site’s functional support
    from Southern California and St. Louis,” he added.

    Mitchell said that asset utilization studies will continue throughout the
    company.
    “It’s our responsibility to run this business well — and that
    includes constantly searching for ways to improve our performance and deliver
    greater value to our customers.
    Today’s business environment changes rapidly,
    and we must adapt continuously to remain competitive,” he said.
    “Every
    decision we make will take our employees’ futures into consideration.
    And as
    additional decisions are made, it will be our priority to announce them to our
    employees first then share them with the communities in which we do business.”