Kelly Ortberg makes first big strategic move with a hatchet, not a scalpel

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Boeing late Friday announced a sweeping decimation of its workforce — with plans to eliminate 17,000 jobs — and solidified long-expected delays to its 777X program as part of the first major strategic restructuring of the aerospace giant under the leadership of its new CEO, Kelly Ortberg. 

“Our business is in a difficult position, and it is hard to overstate the challenges we face together,” wrote Ortberg in a message sent to Boeing’s workforce on Friday after the close of U.S. stock markets, informing its 170,000 staff of plans to reduce its employment by 10%.

Related: Boeing becomes its own ‘burning platform’

While the company faces a host of near-term challenges, including a work stoppage by 33,000 of its unionized machinists at its commercial airplane business now into its 29th day and showing no signs of moving toward a resolution, Ortberg’s restructuring is part of a larger shift by the aerospace giant since he took over in August.

Executives earlier this week indicated that the unresolved strike by members of the International Association of Machinists and Aerospace Workers would lead to “next steps” (historically a reference to impending layoffs) to preserve its business. However, even if the strike were to conclude today and its workers return to the factory, a Boeing spokeswoman told TAC Ortberg’s strategy — including the 10% workforce reduction — is central to “resetting the company for what it needs to be in the future.”

Related: Boeing strike: An interview with IAM 751 president Jon Holden

Ortberg in his message said, “We also need to focus our resources on performing and innovating in the areas that are core to who we are, rather than spreading ourselves across too many efforts that can often result in underperformance and underinvestment.” He noted that cuts would come from the ranks of its executives, managers and employees, though what those specific extraneous areas of the company are today remains unclear.

Ortberg is slated to make his first public comments since taking over the company during Boeing’s third-quarter earnings call on Oct. 23. That first opportunity to hear from Ortberg himself is expected to be a pivotal and trajectory-setting moment in his tenure as chief executive, according to those in the investment and customer communities, especially if there remains no clear path to resolution of the strike by those represented by the IAM.

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