Boeing has announced plans to furlough workers in the coming weeks to conserve cash during the ongoing labor disputes. This decision was made as part of a broader cost-cutting strategy to mitigate the financial impact of the strikes.
The broad spread of cost-cutting measures by the US plane manufacturing giant comes on the heels of last week’s decision by Pacific Northwest employees to take strike action.
Boeing’s Cost-Cutting Plan
In a memo to Boeing employees, Executive Vice President and Chief Financial Officer Brian West laid out the sweeping initiatives. “We must take necessary actions to preserve cash and safeguard our shared future,” West said in the message. “Importantly, we will protect all funding for safety, quality and direct customer support work.”
The range of proposed actions start from the top down. The proposed measures call for a hiring freeze across Boeing for all levels.
Furthermore, it will see a pause of pay increases for executive and management promotions.
Also, this will see a cut in non-critical business travel as well as withdraw from airshows and trade events.
Moreover, the cutback action includes a stop on the issue of the majority of supplier purchase orders on the 737, 767 and 777 programs.
According to the Seattle Times, several sources have reported that Boeing has laid off dozens of engineering contractors.
Furthermore, Boeing hired these workers for the 777X and 737 MAX programs, which have largely remained unaffected by the IAM strike action.
Furlough Program Set to Run
West warned in his memo to staff of the proposed layoffs.
Furthermore, he said that “difficult step of temporary furloughs for many employees, managers and executives” would be enacted in the coming weeks.
Boeing plans to furlough employees in various departments, including manufacturing, engineering, and support functions. The manufacturer has stated that that the decision was made to ensure its long-term financial stability and competitiveness.
At this stage, the exact number of employees affected has not been disclosed. However, the furloughs are likely to have a significant impact on the livelihoods of Boeing workers and their families.
Conclusion
It remains to be seen how the strike and Boeing’s cost-cutting measures will ultimately affect the company. With Boeing now seeking to preserve its cash in hand, Bloomberg Intelligence has observed that if the strike extends through the end of this month it “could lead to a 3.5 billion cash burn.”
This would mean that Boeing’s cash in hand reserves would be potentially shaved to a narrow minimum for operations. For now, industry observers will be closely watching how the strike action and Boeing’s sweeping portfolio of cost-cutting measures play out.
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