Boeing says it's considering temporary job cuts during factory worker strike

Boeing has announced a freeze on hiring, travel reductions, and is considering temporary layoffs as a cash-saving measure during a strike by factory workers that started last week, the company informed employees on Monday.

These measures, which also include cutting spending on suppliers, are necessary because "our business is in a difficult period," according to Boeing’s Chief Financial Officer Brian West. In a memo to staff, West outlined 10 immediate cost-saving actions, including freezing hiring at all levels, pausing pay raises for promoted managers and executives, and limiting travel to only essential purposes.

West also warned of the possibility of temporary furloughs for many employees, including managers and executives, in the coming weeks. He emphasized that the strike poses a significant threat to the company's recovery.

Approximately 33,000 workers, represented by the International Association of Machinists and Aerospace Workers, began their strike on Friday after rejecting an offer of a 25% wage increase over four years. The union had originally demanded at least a 40% raise.

Company and union representatives are scheduled to meet with federal mediators on Tuesday. The union is surveying its members to determine their top priorities in a new contract. Striking workers have set up picket lines in various locations across Washington, Oregon, and California.

Outside Boeing's factory in Everett, Washington, Nancie Browning, a materials management specialist with more than 17 years at Boeing, said the company's latest offer was worse than the one that led to a two-month strike in 2008. She noted that without annual bonuses, the proposed 25% pay increase felt more like 9%.

"We just want a piece of the pie like everybody else," Browning said. "Why should we work all this overtime and bust our backs while these guys [Boeing executives] are sitting up in their suites just raking in the cash?"

Bonuses have become a key issue for union members, who claim they range from $3,000 to $5,000 per year. Boeing, however, says it's difficult to fairly calculate bonuses for 33,000 workers with different jobs. The company proposed replacing the bonuses with automatic contributions of $4,160 annually to each employee's 401(k) retirement account.

Union members are frustrated that Boeing has cut traditional pension plans and reduced health-care benefits in recent years. "We want our pension back," said Jacob Bustad, a Boeing machinist for 14 years. He added that while Boeing has been good for his family, recent years have been tough due to the company’s changes.

Since 2019, Boeing has lost more than $25 billion, burning through $4.3 billion in the second quarter of 2024 alone. The ongoing strike is expected to further delay the delivery of new airplanes, a crucial source of cash for the company.

Stephanie Pope, head of Boeing's commercial airplanes division, highlighted the company’s $60 billion debt when urging workers to accept the proposed contract, which she called Boeing’s best-ever offer. The union's local president and negotiators also supported the deal. However, the workers rejected their leaders' recommendation—a decision not seen since 1995.

Additional cost-cutting measures outlined by West include eliminating first- and business-class travel for non-critical trips and halting spending on outside consultants. Boeing also plans to reduce supplier expenditures significantly and will suspend most purchase orders for its 737, 767, and 777 models.

Following the strike's start, credit rating agencies Moody's and Fitch both issued warnings. Moody's placed Boeing on review for a potential credit downgrade, while Fitch indicated that a strike lasting longer than two weeks could increase the likelihood of a downgrade. Currently, Boeing's debt is rated just above junk status by both agencies.