[Source – cnbc.com]
Boeing Freezes Hiring and is taking additional steps to control costs, including considering temporary furloughs, as a strike involving more than 30,000 workers entered its fourth day. The walkout, which began last week with 96% union member support, has disrupted production of Boeing’s 737 aircraft at a crucial time when the company was working to accelerate assembly. Now, Boeing executives must manage the work stoppage while preparing a new offer for negotiations scheduled to resume on Tuesday.
Boeing’s CFO, Brian West, warned employees that the strike could seriously impact the company’s financial recovery, and in a letter on Monday, he announced the company would halt the majority of supplier purchase orders for its 737, 767, and 777 programs. This rare move could ripple through the aerospace supply chain, which is still recovering from the effects of the COVID-19 pandemic.
Financial Challenges and Supply Chain Fears
Boeing Freezes Hiring as it prioritizes the preservation of its credit rating, which is currently one notch above junk status. The decision to suspend parts orders for most of its aircraft programs, except the 787 Dreamliner, is uncommon and could further deepen the industry’s struggles.Some supply chain sources have raised concerns that smaller companies lacking financial reserves may be forced to lay off workers, potentially creating a cycle of workforce reductions and delays in rehiring once the strike ends.
Boeing is already grappling with significant challenges, including a production crisis following a safety issue with a 737 MAX aircraft in January, as well as $60 billion in debt. S&P Global Ratings cautioned that a prolonged strike would be difficult for Boeing to absorb, given its current financial strain. The strike could result in Boeing reducing its production schedule by 33-35 jets, potentially leading to $102 million in daily revenue losses.
Union Demands and Negotiation Outlook
How Boeing plans to preserve cash amid ongoing strike
The International Association of Machinists and Aerospace Workers (IAM) rejected Boeing’s offer of a 25% pay increase over four years, which did not include an annual performance bonus. The union initially requested a 40% wage hike and is also pushing for the reinstatement of a defined-benefit pension plan.Although union sources do not expect Boeing Freezes Hiring to restore the pension plan, they believe it could serve as leverage to negotiate higher pension contributions and wage increases.
Despite the tough stance on both sides, union members remain optimistic about securing better terms, though they do not anticipate a quick resolution. Many workers are prepared for a potentially long strike, drawing on lessons from past work stoppages.
