SEATTLE, Sept 16 (Askume) – Boeing has frozen hiring and considered temporary layoffs to cut costs as a strike by more than 30,000 workers continued for a fourth day on Monday.
The plane maker and union leadership miscalculated the anger of union members, who voted 96 percent in favor of a strike last week, halting production of the 737 series as Boeing tries to speed up assembly lines. Officials will now have to find a way to complete the deal with new proposals when talks resume on Tuesday.
“This strike seriously jeopardizes our recovery, and we must take necessary steps to preserve cash and protect our shared future, ” Chief Financial Officer Brian West said in a letter to employees on Monday . The ban affects purchase orders to most suppliers for the 737, 767 and 777 programs, the company said, adding, “I recognize these actions will create some uncertainty and concern.
West said last week that the top priority was maintaining Boeing’s credit rating, which is one notch above junk status.
The decision to freeze most orders for all Boeing jetliner programs except the 787 Dreamliner is extremely rare and will have a ripple effect on an industry that is still trying to rebuild from the bottom up after the COVID-19 pandemic.
Some executives immediately warned of a vicious cycle of employee turnover as the industry faces competition from other industries to attract new aerospace workers and engineers.
“Smaller companies don’t have the cash to deal with this, so they’ll start laying off workers,” said one supply chain veteran. “Then those people don’t come back right away and the cycle starts again.”
Security Crisis
Even before the factory workers were laid off, Boeing was already grappling with a safety and production crisis stemming from a door panel exploding on a nearly new 737 MAX aircraft in January, leaving it $60 billion in debt .
“We believe escalating the strike would be costly and ineffective given the company’s already poor financial position,” S&P Global Ratings said in a report on Monday. “It would result in a negative rating action.”
Chris Olin, an equity analyst at Northcoast Research, said the strike could force Boeing to cut production plans for 33-35 jets, resulting in a loss of $102 million in daily revenue and an overall loss of $3 billion or more.
The International Association of Machinists and Aerospace Workers (IAM) has rejected a proposal for a 25% pay rise over four years but scrapping the annual performance bonus. The union initially demanded a 40% pay rise.
IAM posted on its X social media account on Saturday that union leaders will meet with federal mediators and Boeing on Tuesday .
The union’s chief negotiator, John Holden, said Saturday that workers want Boeing to raise pay levels and reinstate defined-benefit retirement benefits that were eliminated a decade ago by Washington state in exchange for continuing to produce planes.
Two union sources told Askume they did not expect Boeing to reinstate the old pension, but said the requirement could be used to reduce the company’s pension contributions and negotiate higher pay.
Union members picketing outside Boeing plants around Seattle are hoping to get a better deal from Boeing, but few expect a deal to be reached anytime soon.
“Boeing and the union haven’t negotiated like this in the past,” said Chris Ginn, who works at a factory north of Seattle that makes 777 jets.
“From paycheck to paycheck”
This is the eighth strike since IAM Boeing was founded in the 1930s. The first two strikes occurred in 2008 and 2005 and lasted 57 and 28 days respectively.
Askume spoke to five workers who used previous shutdowns as a benchmark for financial planning because they would not receive pay during the strike. The union offers striking members $250 a week.
“I can see it taking up to six weeks, eight weeks, but it depends on when Boeing management is willing to offer a fair deal,” said Thinh Tan, a 737 Max factory engineer.
Many factory workers expressed anger that had been simmering within them for more than a decade as they had watched their wages fall below the rate of inflation while executive bonuses soared.
“I live paycheck to paycheck,” Jean said, holding his son in one hand and a “Strike Against Boeing” poster in the other.
