Boeing considers temporary layoffs to cut costs during Machinists strike
Boeing on Monday announced internally a series of sweeping cost-cutting moves in response to the Machinists strike, and said it may temporarily lay off some employees, including managers and executives.
The cost-cutting measures also include significant holds on taking aircraft parts from suppliers, an action that will ripple through the smaller aerospace firms around the region.
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In a message to employees, Chief Financial Officer Brian West said that Boeing is “considering the difficult step of temporary furloughs for many employees, managers and executives in the coming weeks.”
Boeing is also “planning to make significant reductions in supplier expenditures and will stop issuing the majority of supplier purchase orders on the 737, 767 and 777 programs,” West said.
At the end of last quarter, drastically lowered production rates this year had raised Boeing’s accumulated net debt to $45 billion. Of that, $12 billion is due to be repaid within two years.
And because of the strike, Boeing’s credit rating is under review for possible downgrade to “junk” status, which would sharply raise the cost of further borrowing.
The note to employees provided no detail on either the supplier cuts or the temporary layoffs.
“I know that these actions will create some uncertainty and concern, as well as many questions,” West wrote. “We’ll be sharing additional information in the coming days as we have detailed guidance on implementation.”
There’s no realistic chance of permanently Boeing laying off the striking Machinists union members, who walked out early Friday after rejecting a contract offer. (Who would then build the airplanes?)
In addition to the practicality of doing so, there’s a likely legal bar. The union has asked the National Labor Relations Board to consider its action an “unfair labor practices” strike, which if granted formally protects strikers from layoff.
