Workers hold picket signs outside a Boeing Co. manufacturing facility during a strike in Everett, Washington, U.S., Friday, Sept. 13, 2024.
M. Scott Brauer | Bloomberg | Getty Images
Boeing will temporarily furlough thousands of U.S. executives, managers and other employees, citing the ongoing machinist strike as the company races to preserve cash, Chief Executive Kelly Ortberg told employees Wednesday.
The layoffs will affect tens of thousands of Boeing employees, a company spokesman said.
The plan came less than a week after more than 30,000 Boeing machinists in the Seattle and Oregon area overwhelmingly rejected a new labor contract and 96 percent voted to strike, walking off the job shortly after midnight Friday.
Negotiations between the two sides continued this week with a mediator. Boeing had offered a 25% raise and the union backed the tentative contract. But some workers told CNBC that the contract offer was rejected because the raises were not enough to match the rising cost of living in the Seattle area and did not restore their pensions.
“We will not mince words: after a full day of mediation, we are frustrated,” the union said in a statement on Tuesday.
Ortberg, who has been on the job for just under six weeks, said in a memo to staff that affected employees would take one week of leave every four weeks for the duration of the strike and that he and his team would take “proportionate” pay cuts during the strike.
“While this is a difficult decision that affects everyone, it is an effort to preserve our long-term future and help us navigate this difficult time. We will continue to communicate transparently as this dynamic situation evolves and do everything we can to limit this hardship,” Ortberg said in his message.
Boeing Chief Financial Officer Brian West said earlier this week that the company would freeze hiring and raises to cut costs and temporarily furlough “non-essential contractors.”
The financial impact of the strike will depend on how long it lasts, West said, but it is adding to the pressure on Boeing leaders, who are trying to help the company overcome safety and quality crises, including the fallout from a near-catastrophic door stopper explosion in January, and $60 billion in debt.
Ortberg said “activities critical to our safety, quality, customer service and key certification programs will be prioritized and continue,” including production of its 787 Dreamliners, which are manufactured at a non-union facility in South Carolina.
