Boeing’s worker strike is entering its fourth day with more than 30,000 being part of it. This has lead to Boeing freezing hiring and is also weighing temporary furloughs to cut costs. The planemaker Boeing and union leadership badly misjudged anger among union members who backed a strike with 96% support last week.
This Boeing labor strike has stopped the production of its 737 series just as the planemaker was trying to speed up assembly lines. Now executives need to find a way to contain the work stoppage with a fresh offer in talks which resume on Tuesday.
Boeing labor strike impact
“This strike jeopardizes our recovery in a significant way and we must take necessary actions to preserve cash and safeguard our shared future,” CFO Brian West told employees in a letter on Monday. Boeing will stop issuing the majority of supplier purchase orders on the 737, 767 and 777 programs affected by the stoppage,
West last week said that the first priority was preserving Boeing’s credit rating, which is hovering one notch above junk.
Boeing stopping parts order
The decision to stop placing most orders for parts for all Boeing jetliner programmes except the 787 Dreamliner is exceptionally rare and will send shockwaves through an industry still struggling to rebuild from the bottom up after COVID-19.
Some executives immediately warned of a vicious cycle of departures just as the industry is battling competition from other sectors to attract new aerospace workers and engineers.
“The smaller companies don’t have the cash to ride this out so they will start layoffs,” a senior supply chain source said. “Then those people won’t come back immediately and round the cycle goes again.”
Boeing could cut production
Equity analyst Chris Olin at Northcoast Research said that Boeing would likely have to cut 33-35 jets from its production plan because of the strike, resulting in $102 million lost revenue daily and as much as $3 billion or more overall.
“We believe an extended strike would be costly and difficult to absorb, given the company’s already strained financial position,” said S&P Global Ratings in a note on Monday. “A shorter strike, on the order of weeks, would likely be manageable for Boeing and not lead to a negative rating action.””
Union leaders will meet with federal mediators and Boeing on Tuesday, the IAM said in a post, on its X social media feed on Saturday.
Boeing’s decision to freeze hiring and furlough
Boeing’s decision to freeze hiring and weigh temporary furloughs is a direct response to the ongoing labor strike, which has escalated tensions between the company and its workforce. As Boeing faces both operational disruptions and financial strain, freezing hiring is a measure to control costs and limit further financial risk during this uncertain period.
Temporary furloughs are also being considered as a cost-cutting measure, and if implemented, would allow Boeing to reduce its payroll expenses while the strike continues. This would affect both direct employees and contractors in the supply chain, who rely on Boeing’s production pace. The move signals the seriousness of the financial strain Boeing is under, especially as it aims to preserve cash flow and maintain its credit rating, which is already vulnerable—hovering just one notch above junk status.
