A
restructuring of the satellite operations of Boeing Space and
Communications will enable the world’s leading satellite provider to
position itself to compete more aggressively in a highly competitive
market.

Boeing Space and Communications (S&C) is a unit of The Boeing
Co. .

“We will raise the bar on quality and competitiveness, while we
continue to focus on our technical excellence,” said Randy Brinkley,
president of Boeing Satellite Systems (BSS), the satellite operations
arm of Boeing S&C. “We will significantly increase our emphasis on
product and enterprise-wide quality, and we are also restructuring to
enhance our business agility to respond to market changes and to meet
the needs of our customers. This effort is about being positioned for
market leadership and growth.”

The satellite operations’ restructuring will also include
consolidation of facilities, job reductions, and the streamlining of
design and production. The affected operations, BSS of El Segundo,
Calif., and its subsidiary, Boeing Electronic Dynamic Devices of
Torrance, Calif., currently employ more than 9,000 combined.
Approximately 11 percent of jobs will be reduced, including 900 in El
Segundo and 150 in Torrance.

To reduce the actual number of layoffs, the company is making a
major effort to match the skills of as many of the affected employees
as possible with the 350 current job openings at other Boeing Southern
California locations. Boeing is implementing its internal employee
redeployment program, “Operation Resume,” which includes internal job
fairs and personal assistance to match employee skills with these
openings.

While there remains the potential for additional reductions by
year-end depending on business conditions, major new business pursuits
by other Boeing Southern California sites could reduce the impact of
any such cuts by providing BSS employees new employment opportunities.
Approximately 1,000 new openings are projected for major program
pursuits in Seal Beach and Anaheim, Calif., in the next nine months.

“El Segundo is the Boeing Center of Excellence for satellites and
today’s restructuring will enhance its efficiency and
competitiveness,” said Jim Albaugh, president and CEO of Boeing Space
and Communications. “We are also underscoring the site’s long-term
importance by establishing an office for a group of Boeing Phantom
Works technologists in El Segundo to aid in Homeland Security
initiatives and development of commercial satellite communications
programs.” Phantom Works is Boeing’s advanced research and development
division.

As previously announced, Boeing is increasing its capital spending
in El Segundo to add 30,000 square feet of integration and test
capabilities, while reconfiguring the BSS factory along Lean
Manufacturing Practices. In addition, the company remains on track to
begin production in El Segundo of 12 of the U.S. Air Force’s
next-generation Global Positioning Satellites (GPS IIF) in the fourth
quarter 2002.

The company is also pursuing other major new military satellite
business that, if successful, could require new employment totaling
300 in 2003, 300 in 2004 and 700 in 2005.

Addressing BSS employees Brinkley added: “Boeing is committed to
our satellite business and supporting these necessary actions to grow
the business and increase our market competitiveness. We are clearly
in a unique position to leverage the Boeing commitment and resources
to achieve an unprecedented level of enterprise health and workforce
prosperity.

“We have the opportunity to ‘break out of the pack’ and establish
a level of market leadership distinguished by quality performance,
schedule credibility, and technical excellence. With your commitment,
we will be successful.”

Boeing Satellite Systems was instrumental in launching the
satellite communications industry, as evidenced by the more than 200
commercial satellites launched to date. Today’s announcements will
enable the business to build on that heritage, Brinkley added.

Boeing Space and Communications, with headquarters in Seal Beach,
is the world’s largest space and communications company. A unit of The
Boeing Co., S&C provides integrated solutions in launch services,
human space flight and exploration, missile defense, and information
and communications.

It is NASA’s largest contractor; a leading provider of space-based
communications; the primary systems integrator for U.S. missile
defense; and a leading provider of intelligence, surveillance and
reconnaissance. The global enterprise has customers worldwide and
manufacturing operations throughout the United States and Australia.