Boeing has announced plans to halt new hiring and is considering temporary layoffs to conserve funds amid an ongoing strike by factory workers, which started last week.
The company’s Chief Financial Officer, Brian West, outlined ten immediate cost-cutting measures in a memo to employees.
These include a hiring freeze at all levels, a suspension of pay raises for newly promoted managers and executives, and a halt to all non-essential travel.
Additionally, Boeing will cut spending on suppliers due to the challenging business environment.
West indicated that Boeing might implement temporary furloughs for many employees, including managers and executives, in the coming weeks.
He described the current situation as critical, stating, “This strike poses a significant threat to our recovery.”
The strike involves around 33,000 members of the International Association of Machinists and Aerospace Workers, who walked off the job early Friday after rejecting a proposed 25% pay increase over four years. The union had originally demanded a 40% raise.
Negotiations between the company and the union, mediated by federal officials, are scheduled for Tuesday. The union is surveying its members to determine their priorities for a new contract.
Striking workers are picketing in several locations across Washington state, Oregon, and California. Nancie Browning, a Boeing materials-management specialist for over 17 years, criticized the offer, comparing it unfavorably to a previous proposal that led to a two-month strike in 2008.
She claimed that, without annual bonuses, the effective pay increase was closer to 9% rather than 25%.
The issue of bonuses has been a major point of contention. Boeing’s proposal to replace bonuses, which range from $3,000 to $5,000 annually, with $4,160 yearly contributions to each employee’s 401(k) account has not been well received.
Workers are also frustrated over the loss of traditional pension plans and reduced healthcare benefits in recent contract extensions. Jacob Bustad, a machinist with 14 years at Boeing, expressed dissatisfaction, saying,
“We want our pension back. We keep losing benefits while executives continue to earn more.”
Boeing has faced substantial financial losses, exceeding $25 billion since early 2019, including $4.3 billion in the second quarter of 2024 alone. The strike is expected to delay aircraft deliveries, impacting the company’s cash flow.
Stephanie Pope, head of Boeing’s commercial-airplanes division, highlighted the company’s $60 billion in total debt and urged workers to accept what she described as the best contract offer Boeing had ever made, which had received support from the union’s local president and negotiators. Despite this, the workers rejected their leaders’ recommendation, a rare occurrence since 1995.
Additional cost-saving measures outlined in West’s memo include eliminating first- and business-class travel for essential trips and discontinuing outside consulting services. Boeing also plans to significantly reduce spending on suppliers and halt most orders for components related to the 737, 767, and 777 aircraft models.
Courtesy abc news