Boeing freezes hiring after strike spurs drastic measures to save cash

Boeing said it is freezing hiring and weighing temporary furloughs in the coming weeks to manage costs as a strike by more than 30,000 Boeing workers who build planes in factories on the West Coast stretched into its fourth day on Monday.

“I know that these actions will create some uncertainty and concern,” Boeing CFO Brian West wrote in a letter to employees shared on Monday. “This strike jeopardizes our recovery in a significant way and we must take necessary actions to preserve cash and safeguard our shared future.”

Company and union negotiators are due to resume talks over a labor contract on Tuesday.

The International Association of Machinists and Aerospace Workers (IAM), Boeing’s largest union, last week overwhelmingly voted down a contract which included a 25% pay increase spread over four years, but removed an annual performance bonus.

Union leaders will meet with federal mediators and Boeing to restart labor negotiations on Tuesday, the IAM said in a post on its X social media feed on Saturday.

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Jon Holden, the lead union negotiator, said on Saturday that workers wanted Boeing to increase its wage offer and reinstate a defined-benefit pension that was taken away a decade ago in return for keeping plane production in Washington State.

Two union sources told Reuters they didn’t expect Boeing to restore the old pension, but that demand could be used to negotiate bigger company pension contributions and higher pay.

Union members on the picket lines outside Boeing factories around Seattle were bullish about their chances of getting a better deal out of Boeing, but few expect it to happen quickly.

“Not with the history of the way Boeing and the union have negotiated in the past,” said Chris Ginn, a 37-year-old who works in a factory north of Seattle building 777 jets.

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This is the eighth strike since the IAM’s Boeing arm was established in the 1930s. The last two, in 2008 and 2005, lasted 57 days and 28 days, respectively.

Reuters spoke to five workers who were using these previous stoppages as a benchmark for their financial planning since they won’t receive their salaries during the strike. The union provides $250 a week to striking members.

“I can go for six weeks, eight weeks, but it’s up to Boeing management to decide when they want to offer a fair deal,” said Thinh Tan, an engineer in the 737 MAX factory.

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Many factory workers are venting anger that has been brewing for more than a decade as they watched their wages lag inflation, while executive bonuses ballooned.

“I live paycheck to paycheck,” said Ginn, clutching his son in one arm and an ‘On Strike Against Boeing’ placard in the other.

Even before its factory workers downed tools, Boeing was wrestling with a safety and production crisis sparked by a door panel flying off a near-new 737 MAX plane in midair in January.

Fitch and Moody’s on Friday joined S&P Global Ratings in warning that a prolonged strike could lead to a ratings downgrade for Boeing, which is saddled with $60 billion of debt.

Boeing is pausing hiring and taking sweeping steps to conserve cash after about 33,000 workers went on strike on Friday including considering temporary furloughs for many employees, managers and executives in the coming weeks.

Boeing Chief Financial Officer Brian West said the “strike jeopardizes our recovery in a significant way and we must take necessary actions to preserve cash and safeguard our shared future.”

In addition to a hiring freeze across Boeing at all levels, the planemaker is stopping most employee travel, suspending non-essential capital expenditures and facilities spending and planning “significant reductions in supplier expenditures and will stop issuing the majority of supplier purchase orders on the 737, 767 and 777 programs.”

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