Boeing announced plans to temporarily furlough tens of thousands of employees as it grapples with financial losses stemming from an ongoing strike by the International Association of Machinists and Aerospace Workers, the New York Times reports.
The aerospace company said Wednesday that the layoffs would begin in the coming days as production at its manufacturing plants in the Seattle area has been severely impacted by the walkout.
The strike, which started on Friday, involves more than 33,000 union members and has significantly slowed the production of Boeing’s commercial airplanes. In response, the company has initiated a series of cost-cutting measures to mitigate potential financial losses, which could reach into the billions if the strike continues for an extended period.
“With production paused across many key programs in the Pacific Northwest, our business faces substantial challenges,” Boeing CEO Kelly Ortberg said in a message to employees.
Ortberg, who took over as CEO just last month, emphasized that the company must take difficult steps to preserve cash and ensure Boeing’s long-term recovery.
The temporary layoffs are expected to affect a wide range of US-based executives, managers, and employees. While specific details about which workers will be furloughed remain unclear, the company said that some employees will experience cyclical furloughs, taking one week off every four weeks. Benefits will continue for furloughed employees, and Boeing’s engineering staff, represented by a different union, will not be impacted by the furloughs.
Ortberg and other top executives will take pay cuts during the strike, though the extent of these reductions has not been disclosed. The company is also implementing a hiring freeze, limiting travel, and cutting spending across several areas, including the purchase of parts for aircraft production.
The strike, which comes after union members overwhelmingly rejected Boeing’s latest contract proposal, has placed significant pressure on both parties. The union rejected a contract that included a 25% raise over four years, citing concerns over cost-of-living increases and previous concessions on retirement benefits. Boeing and union representatives resumed negotiations on Tuesday with the help of federal mediators.
Boeing has faced strikes from the machinists’ union before, including a two-month walkout in 2008 that resulted in over $6 billion in lost revenue and delayed the delivery of more than 100 planes. As the current strike progresses, the company is prioritizing essential functions such as safety, quality, and customer support to maintain operations in key areas.
Despite the challenges, Ortberg assured employees that Boeing will “do all we can to limit this hardship” while taking steps to protect the company’s long-term future.
