SEATTLE — Boeing has announced that they will be placing some employees on "temporary furloughs" to preserve cash amid an ongoing machinist strike that has brought airplane production to a halt.
The company's new CEO, Kelly Ortberg, who took the helm in August, released a statement Wednesday saying that a "large number of US-based executives, managers and employees" will be placed on temporary furloughs while IAM District 751 and Boeing continue to bargain on an agreement.
"Our business faces substantial challenges and it is important that we take difficult steps to preserve cash and ensure that Boeing is able to successfully recover," Ortberg wrote.
Tens of thousands of employees, both salaried and hourly, are impacted by the furlough announcement, according to a Boeing spokesperson.
Employees represented by SPEEA, a union that represents engineers and technical workers, will not be put on furlough because of the language in their contract with the company. A union rep for the Teamsters also confirmed that employees they represent are not currently impacted by the furloughs.
Impacted employees will be placed on one week of furlough every four weeks on a rolling basis for the duration of the strike. Employees will maintain their medical benefits.
Ortberg also announced that he and members of his leadership team will take pay cuts while the strike continues.
Activities critical to safety, quality, customer support and key certification programs will continue, including 787 production.
"While this is a tough decision that impacts everybody, it is in an effort to preserve our long-term future and help us navigate through this very difficult time," Ortberg wrote. "We will continue to transparently communicate as this dynamic situation evolves and do all we can to limit this hardship."
Over 30,000 Boeing machinists are on strike after their current agreement with the company expired at midnight on Sept. 13.
The machinists, among other demands, want a 40% increase in pay and the reinstatement of pensions that Boeing axed in 2014. Boeing and union negotiators had previously announced a tentative agreement, but it was nearly unanimously rejected later that week, with 94% of members voting to reject the contract proposal and 96% voting to go on strike.
The company previously announced other cost-cutting measures that they plan to implement until they reach a new contract agreement with the union, including:
- Boeing is instituting a hiring freeze across all levels and pausing pay increases associated with internal executive and management positions
- Stopping any travel that is not for critical customer, program, regulatory or supply chain activity
- Eliminating all first and business class air travel, including for executive council
- Suspending nonessential capital expenditures and facilities spending
- Suspending outside consultant spending and temporarily releasing nonessential contractors
- Pausing charitable and other contributions and advertising and marketing expenditures
- Reducing company participation in airshows, tradeshows and special events
- Pausing employee recognition and team event spending
- Stopped catered meal and food services at Boeing facilities, unless customer related
- Cancelling any team off-site meetings. On-site meetings that require travel should be made virtual