Boeing will layoff about 160 workers by the end of 2014 and that's about 40 percent of the workforce in El Paso.
The company says it will be offering severance packages to workers who are fired.
Boeing's military contract will also shrink. The plant makes electronic parts for the military, but with cutbacks in the defense budget, Boeing reports there'll be less demand for the parts, and so production will slow down.
The company released the following statement in response to the layoffs:
"This difficult decision was based on a thorough study of the current and future business environment and the need to remain competitive... We recognize this will affect the lives of many of the highly skilled men and women who work here, so we will do everything possible to assist our employees, their families and our community through this difficult time."
Less employees means less workspace. Boeing is downsizing their facilities from three buildings to one.