Boeing will temporarily furlough hundreds of executives, managers and other employees within the U.S. in response to the continuing machinists' strike as the corporate struggles to keep up its liquidity, CEO Kelly Ortberg told employees on Wednesday.
The forced furloughs would affect tens of hundreds of Boeing employees, an organization spokesman said.
The plan got here lower than every week after Boeing's greater than 30,000 machinists within the Seattle area and Oregon overwhelmingly rejected a brand new labor contract and voted 96 percent in favor of a strike. They walked off the job just after midnight Friday.
Negotiations between the 2 sides continued this week with a mediator. Boeing had offered a 25 percent wage increase and the union had approved the tentative contract. But some employees told CNBC the contract offer was rejected since the raises weren’t enough to offset the increased cost of living within the Seattle area and wouldn’t restore their pensions.
“We are not mincing our words – after a whole day of mediation, we are frustrated,” the union said in an announcement on Tuesday.
Ortberg, who has had the job for nearly six weeks, explained in a letter to employees that the affected employees can be given one week of short-time work every 4 weeks all through the strike and that he and his team would accept “corresponding” wage cuts in the course of the strike.
“While this is a difficult decision that affects everyone, it is an effort to secure our long-term future and help us get through this very difficult time. We will continue to communicate transparently as this dynamic situation evolves and do everything we can to limit this hardship,” Ortberg said in his message.
Boeing Chief Financial Officer Brian West said earlier this week that the corporate would freeze hiring and salary increases and temporarily lay off “non-essential contract workers” to chop costs.
The financial impact of the strike will depend upon how long it lasts, West said, but it’ll increase pressure on Boeing's leadership because it tries to drag the corporate out of a security and quality crisis that features the fallout from a near-catastrophic door seal failure in January and a $60 billion debt pile.
Ortberg said that “activities critical to our safety, quality, customer care and important certification programs are a priority and will continue,” including production of the 787 Dreamliners, that are manufactured at a non-union plant in South Carolina.
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