Workers hold picket signs during a strike outside a Boeing manufacturing plant in Everett, Washington, USA, Friday, September 13, 2024.
M. Scott Brauer | Bloomberg | Getty Images
Boeing The company is furloughing thousands of U.S. executives, managers and other staff because of the ongoing mechanics’ strike as it tries to conserve cash, CEO Kelly Ortberg told employees on Wednesday.
A Boeing spokesman said the layoffs affect tens of thousands of employees.
The plan was announced less than a week after more than 30,000 Boeing machinists in the Seattle area and Oregon overwhelmingly rejected a new labor agreement, with 96% voting to strike and walk off the job just after midnight Friday.
Negotiations between the two sides continued this week with the help of a mediator. Boeing offered a 25% pay increase and the union approved a tentative contract. But some workers told CNBC that the contract offer was rejected because it didn’t provide enough raises to keep up with rising costs of living in the Seattle area and didn’t restore pensions.
“We will not mince words: after a full day of mediation, we are unhappy,” the union said in a statement on Tuesday.
Ortberg, who has been in the job for just under six weeks, said in a memo to staff that affected employees would receive one week off for every four weeks during the strike, and that he and his team would take a “proportionate” pay cut for the duration of the strike.
“This is a tough decision that affects everyone, but it is an effort to protect our long-term future and weather this extremely difficult time. We will continue to communicate transparently as this dynamic situation evolves and do all we can to minimize this hardship,” Ortberg said in the message.
Boeing Chief Financial Officer Brian West said earlier this week that the company would freeze hiring and pay increases and temporarily lay off “non-essential contractors” to cut costs.
West said the economic impact of the strike will depend on how long it lasts, but it will increase pressure on Boeing leaders as they try to navigate a safety and quality crisis that includes the fallout from January’s door plug explosion and $60 billion in debt.
Ortberg said “activities critical to our safety, quality, customer support and key certification programs will be prioritized and continue,” including production of the 787 Dreamliner, which is built in a non-union facility in South Carolina.