Boeing has announced a hiring freeze and cuts to purchases from some suppliers, telling workers temporary furloughs could follow as it moves to conserve cash in the face of a fourth day of strike action.
The action by 33,000 union members who took to the picket line last week to demand better pay and working conditions “jeopardises our recovery in a significant way, and we must take necessary actions to preserve cash”, chief financial officer Brian West told employees on Monday.
The plane maker has struggled in recent years – partly because of its own mistakes, as new chief executive Kelly Ortberg acknowledged last week. A prolonged strike would interfere with Boeing’s deliveries to customers, which include Irish airline Ryanair, threatening its cash flow and putting its investment-grade credit rating in doubt.
The company said it would stop most purchases from suppliers to its 737 Max, 767 and 777 jets, all of which are built in the Washington factories where workers are on strike. That is a blow to an already fragile aerospace supply chain, with the potential to ripple out to Boeing’s rival Airbus, because companies often supply both manufacturers.
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[ Ryanair may get fewer planes by next summer due to Boeing strike, says O’LearyOpens in new window ]
Boeing is also pausing hiring and non-essential travel and capital expenditures, Mr West said, and “considering the difficult step of temporary furloughs for many employees, managers and executives in the coming weeks”.
The strike started early on Friday after members of the International Association of Machinists and Aerospace Workers District 751 voted 96 per cent to reject a tentative deal negotiated by the union’s bargaining team.
The deal included a 25 per cent pay rise over four years, improved retirement and healthcare benefits, and greater input on quality and safety. Boeing also agreed to build the next jetliner in Washington if it is launched during the four-year term of the contract, a critical provision for job security.
But the proposed deal eliminated an annual bonus and fell short of the union’s original demand for a 40 per cent pay rise. Union members’ pay has risen 4 per cent over the past eight years even as inflation rose to its highest level in decades.
Many machinists also remain angry over a 2014 negotiation that killed their defined benefit pensions after the company had said it would move work away from Washington to its non-union plant in South Carolina.
[ Boeing staff to strike in latest blow to planemakerOpens in new window ]
Matthew Goetz, a retired machinist picketing in Renton, Washington, carried a sign from the machinists’ strike in 1989, which listed five other strikes in which he had participated. He said any deal must include improved wages and benefits given the rising cost of living.
He added that, over his 40 years at Boeing, he had seen the company’s respect for its workforce rise and fall, “but in general, you’re a commodity”. At the same time, he noted, former chief executive Dave Calhoun’s most recent pay package totalled nearly $33 million (€29.7 million).
“He failed as a CEO,” Mr Goetz said. “He’s led this company right down a hole, and he got pay increases, and he got millions of dollars in bonus. So don’t tell me, Mr Boeing, there’s no money to go around, because obviously there is.”
The union said over the weekend that it was surveying members to identify their top priorities for continued bargaining. It will meet federal mediators and Boeing officials on Tuesday to resume discussions. – Copyright The Financial Times Limited 2024
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