Boeing to cut workers at California satellite plants

By Jim Wolf

WASHINGTON (Reuters) - Boeing Co (BA.N), passed over for a potential $3.6 billion Air Force satellite deal, said on Wednesday it plans to lay off about 750 workers in Southern California because of a downturn in its satellite assembly and integration business.

The company blamed U.S. government delays in awarding a pair of multibillion-dollar satellite contracts as well as a loss to Lockheed Martin Corp (LMT.N) last week in a battle for a contract for a new generation of global positioning satellites known as GPS III.

"The stretching out of government contract awards, along with a continuing lighter demand in the commercial marketplace for large, high-power satellites, has created a surplus in the work force that must be addressed now so that we are competitive," Greg Cooning, general manager of Boeing Space and Intelligence Systems business unit, said in a statement.

The government has delayed the Pentagon's planned Transformational Satellite Communications System and a weather satellite system known as Geostationary Operational Environmental Satellites System.

"Last week's loss further complicated matters," said Joseph Tedino, a Boeing spokesman.

The job cuts mainly involve engineers, although all skills will be affected, the company said. It said most were in El Segundo and Seal Beach, California.

Boeing expects to issue 60-day notices in May for an initial group of 100 employees, with layoffs to occur in July. Cooning's unit plans to cut its current work force of 7,200 to about 6,450 at the end of 2008, it said.

"This is a difficult time for employees in our space systems organization, but we are committed to strengthening the business," said Cooning. "These reductions in force are necessary to accomplish that goal."

Boeing said it would help affected employees find jobs at other company locations, if possible.

(Reporting by Jim Wolf, editing by Leslie Gevirtz and John Wallace)