Boeing has halted hiring and is contemplating temporary furloughs as a strike by over 30,000 workers stretches into its fourth day. The strike, supported by 96% of union members, has disrupted production of Boeing’s 737 series, a critical line as the company was ramping up its assembly efforts. Now, company leadership is working to resolve the standoff, with negotiations set to resume on Tuesday.
“This strike poses a significant threat to our recovery, and we need to take immediate measures to conserve cash and secure our shared future,” CFO Brian West stated in a letter to employees. Boeing will also stop issuing most supplier orders for its 737, 767, and 777 programs, he added. West emphasized that the company’s top priority remains preserving its credit rating, which is just above junk status.
The decision to halt orders for Boeing’s aircraft programs, except for the 787 Dreamliner, is highly unusual and is expected to send shockwaves through an aerospace industry still recovering from the pandemic. Some supply chain executives warned that smaller companies might be forced to lay off workers, creating a cycle of workforce reductions and making it harder to attract skilled labor back to the sector.
Even before the strike, Boeing was facing safety and production issues, including a door panel flying off a 737 MAX mid-flight earlier this year, all while managing $60 billion in debt. S&P Global Ratings warned that an extended strike could be tough for Boeing to absorb given its already strained finances, though a shorter strike would likely be manageable.
Equity analyst Chris Olin of Northcoast Research estimates that Boeing may need to cut production by 33 to 35 jets due to the strike, resulting in daily revenue losses of $102 million and potentially more than $3 billion overall.
The union, the International Association of Machinists and Aerospace Workers (IAM), rejected Boeing’s offer of a 25% pay increase over four years, as it also removed an annual performance bonus. The union had initially sought a 40% wage hike. Negotiations with federal mediators are set to continue this week, with workers hoping for a better deal, particularly on wages and pensions.
While union members remain optimistic about securing improved terms, they anticipate a lengthy process based on previous labor disputes. “We’re prepared for a long strike,” said Chris Ginn, a Boeing worker, adding that many are still frustrated by years of stagnant wages while executive compensation soared.
This marks the eighth strike in the IAM’s Boeing division history, with the last two strikes in 2008 and 2005 lasting 57 and 28 days, respectively. Some workers are already planning their finances for the long haul, knowing the union provides only $250 a week in strike pay. “I can go six to eight weeks,” said 737 MAX engineer Thinh Tan, “but it’s up to Boeing management to offer a fair deal.”
