Boeing to Furlough Workers to Save Cash as Machinists Strike Lingers On

Boeing employees assemble 787s inside the company's main assembly building on its campus in North Charleston, S.C. on May 30, 2023. Gavin McIntyre/Pool via Reuters

Boeing will require employees to take unpaid leave as part of cost-cutting measures in response to a strike that’s about to enter its second week.

In a memo sent out on Sept. 18, Boeing CEO Kelly Ortberg said the furlough would be temporary and affect “a large number” of executives, managers, and other employees in the United States. The Virginia-based aerospace giant had a workforce of 171,000 at the start of the year.

The affected employees will keep their benefits, and to minimize the impact, they will be off work for one week every four weeks on a rolling basis for the duration of the strike. Ortberg noted that senior executives, including himself, would also take pay cuts, though he did not specify how deep the cuts would be.

“While this is a tough decision that impacts everybody, it is in an effort to preserve our long-term future and help us navigate through this very difficult time,” Ortberg said in the company-wide message seen by The Epoch Times.

The furloughs, set to begin “in the coming days,” follow a work stoppage triggered by the International Association of Machinists and Aerospace Workers (IAM), which represents more than 33,000 employees across Washington state, Oregon, and California. The union members overwhelmingly voted to strike, rejecting Boeing’s offer of a 25 percent wage increase spread over four years.

Boeing’s commercial airplane production, mostly concentrated in the Pacific Northwest, has been largely halted since the strike began. The union, which has worked under the same contract since 2008, is now demanding a 40 percent wage increase, annual bonuses, and a return to a pension system that the union failed to secure in a 2014 contract extension.

Despite the disruptions, Ortberg assured employees that production of the 787 Dreamliner at the company’s non-union South Carolina plant would resume.

“All activities critical to our safety, quality, customer support and key certification programs will be prioritized and continue, including 787 production,” he said.

In addition to the planned furloughs, Boeing has implemented a hiring freeze, reduced spending on suppliers, and cut most business travel.

“With production paused across many key programs in the Pacific Northwest, our business faces substantial challenges and it is important that we take difficult steps to preserve cash and ensure that Boeing is able to successfully recover,” Ortberg said in the Sept. 18 memo.

Negotiations between Boeing and IAM, mediated by the Federal Mediation and Conciliation Service, are ongoing but have yet to yield a breakthrough.

“We are frustrated,” the IAM wrote in a Sept. 17 update on X, addressing its members. “The company was not prepared and was unwilling to address the issues you’ve made clear are essential for ending this strike: Wages and Pension. The company doesn’t seem to be taking mediation seriously.”

Boeing faces the risk of a credit rating downgrade, which would make borrowing more expensive if the machinists’ strike is not resolved soon. Shortly after the strike began, ratings agency Moody’s placed Boeing on review for a potential downgrade, while Fitch warned that a walkout lasting more than two weeks would make a downgrade more likely.