The American aircraft manufacturer Boeing, affected since Friday 13 September by a strike that has paralysed production of the 737 MAX and 777 in particular, announced on Monday 16 September that it would reduce its expenses, taking into account technical unemployment. “in the next few weeks”.
According to West, the aircraft manufacturer has decided to freeze all hiring; he is preparing to reduce “significantly” procurement expenditure and plans to implement “in the next few weeks” temporary technical unemployment measures.
“We are working in good faith to reach a new collective agreement that takes into account the reactions and allows us to resume activity”said Brian West, the aircraft manufacturer’s chief financial officer, in a message to employees.
“However, our group is going through a difficult time”He continued, assuring that the strike “significantly threatens our recovery”. Therefore, the management has taken “measures necessary to preserve liquidity and protect our common future” and ensure the financing of the “safety, quality and direct customer service”.
A “difficult stage”
Boeing has therefore frozen all hiring and promotion-related pay increases, suspended all non-essential travel and eliminated first- and business-class travel, even for members of its management.
It also halted all consulting, charity, advertising and marketing spending, among many actions already undertaken. In addition, the group is preparing to reduce “significantly” procurement costs and, in particular, to stop placing orders for the 737, 777 and 767 programmes manufactured at the Renton and Everett factories in the Seattle region (northwest), where production has been halted since Friday.
Brian West added that the group was considering a “difficult stage” : the implementation “in the next few weeks” temporary technical unemployment measures for many employees, managers and directors. Negotiations between Boeing and the local branch of the International Union of Machinists and Aerospace Workers (IAM) will resume on Tuesday, under the auspices of federal mediation.
Multitude of quality problems.
The more than 33,000 members represented by IAM-District 751 (out of some 170,000 employees of the group) rejected on Thursday the draft collective agreement announced on September 8 by 94.6% and approved a strike by 96%. The last strike, in 2008, lasted 57 days.
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The strike has led to the closure of two major assembly plants in the Puget Sound region, halting production of the 737, 777 and 767 freighters, whose deliveries are already facing delays. An even more problematic situation for the aircraft manufacturer, as it collects the majority of the payment (around 60%) upon delivery of the aircraft.
Boeing has been in a precarious financial situation since the crash of two 737 MAX 8s in 2018 and 2019, which claimed 346 lives and caused a series of production quality problems. However, the dissatisfied consider that the salary increase is too far from the union’s demands (+40% initially) and that the pension aspect is unsatisfactory.
Boeing has been under increased scrutiny since an in-flight incident in early January involving an Alaska Airlines 737 MAX 9. A series of compliance and quality control issues have reignited questions raised about those same deficiencies after the two crashes.
The last strike by the American aircraft manufacturer was in 2008 and lasted 57 days. According to the financial analysis firm TD Cowen, a 50-day strike would deprive Boeing of 3.5 billion dollars of liquidity and have an impact of 5.5 billion dollars on its turnover.
