Boeing has announced plans for a workforce reduction, notifying around 17,000 employees this week that they will be leaving the company in mid-January.
The cuts, representing 10% of Boeing's total workforce, come in the wake of a labor union strike. In a statement to FOX Business, Boeing said: "We are adjusting our workforce levels to align with our financial reality and a more focused set of priorities."
Boeing Axes 17,000 Jobs In Major Workforce Reduction
CEO Kelly Ortberg, who assumed the role in August, informed staff in a memo last month that the job cuts would affect executives, managers, and employees.
"Our business is in a difficult position, and it is hard to overstate the challenges we face together," Ortberg told staff, noting that the situation "requires tough decisions, and we will have to make structural changes to ensure we can stay competitive and deliver for our customers over the long term."
The company employs approximately 170,000 people globally, many of whom work in South Carolina and Washington state manufacturing facilities. In 2027, the company announced that it would cease production of the 767 aircraft following the completion of current orders for 29 jets.
Boeing also postponed the rollout of its new 777X to 2026, pushing it back from the original 2025 target. This delay follows the recent discovery of a defective part that grounded test flights earlier this year.
Boeing Battered By A Series Of Crises
The aerospace company was hit by a strike involving 33,000 Seattle-area workers. The strike brought production of the 737 Max, Boeing's best-selling plane, as well as the 777s and 767s to a standstill. Workers' overwhelming rejection of the company's proposed contract negotiations triggered the strike.
The Max is Boeing's cash cow. In late October, it raised over $24 billion to bolster its shaky finances and safeguard its investment-grade rating amid concerns from rating agencies. Boeing's tumultuous year began on January 5 with a 737 Max jet losing a door panel in mid-flight.
Since then, the company has faced a series of challenges, including the departure of its CEO, production slowdowns due to regulatory investigations into its safety culture, and a major strike by its largest union on September 13.
The end of the strike on November 5 and the return of Boeing's workers to Seattle-area assembly lines this week paved the way for a gradual revival of Max production.
While Boeing workers secured significant gains after their recent strike, Jake Rosenfeld, a professor of sociology at Washington University in St. Louis, says the future of organised labor under the new administration remains uncertain.
A Potential Setback For Organised Labour?
Boeing machinists ratified a new contract on November 4, 2024, following negotiations between their union, the International Association of Machinists and Aerospace Workers (IAM), and the nation's largest commercial aircraft manufacturer.
IAM members secured a significant victory, winning a 43 percent cumulative wage increase over the next four years, substantial signing bonuses, increased company contributions to workers' 401k plans, and a commitment from Boeing to build its next plane in the Seattle region.
According to Professor Rosenfeld's post on Caledonian Record, nearly 60 percent of the roughly 33,000 workers ratified the contract, ending a nearly seven-week strike that had halted plane production and contributed to Boeing's losses exceeding $6 billion in the past three months.
With this new contract, Boeing machinists will see a significant pay increase. They will earn an average of $119,309 per year, up from their previous annual average of $75,608.
"I'm a professor who has researched organised labour for two decades. Because the Boeing machinists won much of what they originally demanded, I see much in common between this deal and the contracts that ended or averted strikes at UPS and Detroit's three big automakers in 2023," Professor Rosenfeld said.
"But it's not clear that these kinds of union wins will continue in President-elect Donald Trump's second administration. Based on his record and his rhetoric, it's reasonable to expect Trump will make it harder for workers to join unions and will take other steps to weaken the power of organised labour," he explained.
The recent labour dispute between Boeing and its workers highlights the evolving dynamics of labour relations in the aerospace industry. As the company navigates through a series of challenges, the resolution of this strike offers a glimmer of hope for both the company and its workforce.
