The fallout from the massive strike of about 33,000 unionized Boeing (BA) is workers is becoming more problematic every day.
It’s been over a month since the workers first hit the picket lines fighting for higher pay, retirement security, lower out-of-pocket health care costs, and other concerns. While the workers struggle to settle on a new contract with the aerospace company, analysts have estimated that Boeing is losing about $1 billion per month because of the strike.
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As Boeing’s pockets are being drained significantly from the strike, especially during a time when the company is also losing money due to safety and quality issues with its planes, it has resorted to making a harsh decision in order to save some coins: giving thousands of employees the boot.
Related: Boeing delivers hard-nosed message to employees amid strike
In a memo sent to employees on Oct. 11, Boeing CEO Kelly Ortberg revealed the company will be laying off 10% of its workforce, which is about 17,000 employees.
“Our business is in a difficult position, and it is hard to overstate the challenges we face together,” said Ortberg in the memo. “Beyond navigating our current environment, restoring our company 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.”
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The job cuts will affect “executives, managers and employees.” Ortberg also states in the memo that the company needs to be “realistic” about the time it will take to recover going forward.
“We also need to focus our resources on performing and innovating in the areas that are core to who we are, rather than spreading ourselves across too many efforts that can often result in underperformance and underinvestment,” said Ortberg.
In an emailed statement to TheStreet, a Boeing spokesperson confirmed that the layoffs include "union-represented and non-union workers," and it will take place over the next few months.
In addition to the layoffs, Ortberg said that the company will be delaying the production of its new 777X jet, which will now roll out in 2026 instead of 2025. It is also ceasing production of its 767 aircraft in 2027.
Boeing employees were previously warned of fallout from strike
The move from Boeing comes after Boeing Chief Financial Officer Brian West warned employees in a memo on Sept. 12 that the strike will have negative impacts on the company. This includes hiring freezes, temporary layoffs, a pause on charitable expenditures, and other cutbacks.
“This strike jeopardizes our recovery in a significant way and we must take necessary actions to preserve cash and safeguard our shared future,” said West in the memo.
Striking Boeing workers reject new contract
It appears that the strike won’t be ending anytime soon as Boeing and its unionized employees recently hit a snag in negotiations on a new contract.
In late September, Boeing laid out its “best and final offer” to the striking workers which includes a 30% pay increase over four years, a $6,000 ratification bonus, annual bonuses, and an increased company contribution to employee retirement plans. Boeing gave the workers until Sept. 27 to conduct a vote on the offer.
Related: Boeing's hardball play with striking workers backfires
The International Association of Machinists, the union that represents the workers, declined the new contract and criticized the offer for being a “show of disrespect,” claiming that the union was not given enough time to organize a vote.
“This tactic is a blatant show of disrespect to you — our members — and the bargaining process. Boeing does not get to decide when or if you vote,” said the IAM in a statement to its union members on X. “Boeing has misled the media by wrongfully stating the Union membership is required to vote on their latest offer. As you see in Boeing's offer, they made it contingent on ratification by 11:59 PM PT on Friday, September 27, 2024. This does not give us enough time to present details to the membership or even secure all voting locations.”
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