Boeing Will Cut Spending as Strike Takes Financial Toll
Union leaders called for over 33,000 workers to go on strike on Friday, following an overwhelming vote by members to reject a tentative contract negotiated between their union and company management. The walkout brought production of the company’s most popular aircraft and other planes to a virtual halt, impeding the company’s recovery from a safety crisis that occurred earlier this year.
The company stated it is working to reach a new contract agreement but needs to take steps to control spending during the walkout. The chief financial officer communicated to employees that the business is in a difficult period, emphasizing that the strike significantly jeopardizes the company’s recovery and necessitates actions to preserve cash and safeguard the future.
The company plans to protect funding for safety, quality, and customer support while reducing spending in other areas. In addition to pausing hiring, the company froze nonessential travel and eliminated premium air travel for top executives.
Other cost-cutting measures include limiting spending on consultants, advertising, marketing, charitable giving, and on-site catering. The company is also considering temporary furloughs for employees at various levels.
Plans to reduce supplier spending were also announced, a move that could have prolonged consequences. The aerospace supply chain is fragile, and cost-cutting can imperil smaller vendors to larger manufacturers. The supplier spending cuts include stopping most orders for parts used in several of the company’s airplane models.
The duration of the strike remains uncertain, and resolving it may prove challenging. In a recent vote, an overwhelming majority of workers rejected the tentative contract, with a slightly larger share voting in favor of a strike. Many members expressed dissatisfaction with the proposed raises and retirement benefits.
This marks the first strike by these employees since 2008, which lasted nearly two months. The contract reached after that walkout had been extended several times before expiring recently. Negotiations between the company and the union are scheduled to resume soon, with the assistance of federal mediators.