CRYSTAL CITY, VA—In an email message to all Boeing employees on September 18, President and CEO Kelly Ortberg announced, “temporary furloughs” for US-based executives, managers and employees to start in the “coming days.”
“With production paused across many key programs in the Pacific Northwest, 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,” wrote Ortberg in his morning message to employees.
Selected employees will be notified by their managers today to take one week of furlough every four weeks on a rolling basis for the duration of the strike—a 25% pay cut. A spokesperson told the Lynnwood Times that the furloughs will affect “tens of thousands of Boeing employees” and will be broad-based in the US, starting with business areas “most impacted by the work stoppage in the Pacific Northwest.”
A furlough is an involuntary leave without pay for a specified period; however, workers retain their employment. Boeing did confirm that furloughed employees will also retain their benefits.
“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,” wrote Ortberg.
Ortberg committed that the furloughs will not compromise “activities critical to our safety, quality, customer support” and that key certification programs will be prioritized, including the 787 production.
A week ago on September 12, the International Association of Machinists (IAM) 751 and W24 union members voted overwhelmingly to strike which took effect the following day.
IAM union members which encompasses approximately 33,000 Boeing employees on the 737 MAX, 767 Cargo, 777, and 777X are now on the picket lines striking for higher wages. In the past, Boeing Machinist strikes have lasted as little as 19 days in 1965 to as long as 69 days in 1995, with the exception being 20 weeks in 1948, King 5 reported.
With Boeing’s CEO announcing furloughs to preserve cashflows, hopes for a timely agreement with IAM are now in question. According to an article in HR Digest, Boeing is losing an estimated $100 million per day because of the strike.
On Tuesday, September 17, the IAM Negotiating Committee met with Boeing and the Federal Mediation and Conciliation Service (FMCS) to resume contract discussions. In a statement on its website to striking workers regarding the progress of Tuesday’s meeting, the union alleged that Boeing “was not prepared and was unwilling to address the issues you’ve made clear are essential for ending this strike: Wages and Pension.”
“We will not mince words – after a full day of mediation, we are frustrated,” the union stated.
Throughout negotiations prior to the high-stakes strike, the key demand by the union was for a 40% increase in wages over a three-year period, modifications to retirement contributions and healthcare plans, and a guarantee to keep production in the Pacific Northwest. Most of the employees represented by IAM live in the Greater Seattle Area.
On Sunday, September 8, IAM and Boeing reached a tentative agreement for a 25% wage increase – the largest ever wage increase for Boeing production workers in Washington and Oregon.
That tentative agreement also included:
- A $3,000 lump sum payment within 30 days if the bargaining agreement is ratified by 11:59 p.m. on September 12, 2024, with the ability to defer all or part to your Boeing 401(k).
- New Boeing contribution of up to $4,160 per employee per year to the union’s 401(k) plan.
- Paid parental leave would begin Jan. 1, 2025. At that time, you can also use this benefit if you welcomed a new child between Sept. 13 and Dec. 31, 2024.
- A lower cost share for health care, plus plan improvements such as a new free primary care benefit and a new company-paid long-term disability plan.
- Effective January 1, 2025, and each January 1 thereafter, employees would receive one annual floating holiday to be used in a full day increment. Employees can use it on a holiday or any other day they choose with advance scheduling. It must be used before the end of each year.
However, with a vote of 94.6%, IAM 751 and W24 union members rejected the latest Collective Bargaining Agreement with Boeing on September 12 and also agreed to strike with a vote of 96% that began at 12:01 a.m., Friday, September 13.
Striking employees are generally not eligible for unemployment benefits in Washington and will not receive any pay from Boeing. Striking employees will not be allowed to charge vacation time nor sick leave during the strike. If a new contract is not put in place by the end of September, company-paid health care benefits will end for striking employees and their covered family members effective the end of day on September 30, 2024.
Senate Bill 5632 that was sponsored by Senator Keiser (D-Des Moines) and passed during the 2024 legislative session, allows workers who lose health care coverage due to a strike or labor dispute may apply for health and dental insurance through the Washington Health Benefit Exchange. Applicants have a 60-day special enrollment period before and after employer coverage ends to shop for a health or dental plan on Washington Healthplanfinder.
According to an article by Labor Notes, starting the third week of the strike, the union will provide striking employees $250 per week to relieve some of the financial stress to their decision to strike. The article also mentions that striking workers are picking up outside work such as Doordash or Uber.
Economic Impact of the strike
Aerospace is a $71 billion industry in Washington state supporting some 194,000 jobs according to a 2024 report by the Seattle Metropolitan Chamber of Commerce and delivered $19.4 billion in labor income to Washington employees in 2023. In 2022, Boeing paid more than $200 million in taxes to Washington state.
The 2008 strike resulted in a loss of about $2.5 billion which, adjusted for inflation, would equal about $3 billion today. Since 2019 Boeing has lost about $32 billion, made worse by its 5,600 backlog of commercial jet orders valued at approximately $529 billion.
In 2020 when Boeing halted its production of the 737 MAX, economists estimated a 0.5- to 0.6-percent drop in GDP growth for the entire U.S. There is no doubt that today’s strike will impact hundreds of local suppliers, vendors, restaurants, charities, retailers and other businesses not only in Snohomish County but throughout the region. In the Lynnwood-Everett region alone, aerospace workers spent nearly $36.5 million on automobile purchases in 2023.
Boeing is the nation’s largest exporter and has a global workforce of 170,000 with approximately 66,000 employed in Washington state—there is a total of 77,000 aerospace workers in the state. It has contracts with at least 12,000 suppliers around the world of which over 1,000 are in Washington state.
According to the Seattle Metropolitan Chamber of Commerce’s report, in 2023, Boeing supported 82% of industrywide business revenues, 80% of total jobs, and 77% of total labor income generated by the aerospace industry.
With S&P Global and Moody’s lowering the aircraft manufacturer’s creditworthiness in April, the FAA capping 737 Max production to 38 planes per month, delays in 777X production, and setbacks meeting mandated international “greener” emission standards for its 767 aircrafts, the company may soon face a cash crunch as it burns through billions of dollars more than projected.
Boeing stock has taken a 9.8% hit since Tuesday, September 3, after Wells Fargo analyst Matthew Akers downgraded the company’s stock valuation stating a problem with free cash flow.
“Boeing carries about $45 billion net debt and (it) must address this before it kicks off the next aircraft development cycle,” Akers said, adding that cutting the debt would consume its cash flow through 2030, Reuters reports.
Author: Mario Lotmore
7 Responses
It is really too bad that managers and other workers at Boeing are going to have to sacrifice a week’s pay every month because of the greed of the striking workers. I feel bad that is going to happen.
I have zero sympathy for the striking workers however. Boeing workers already have it better than about 99% of workers in the U.S.
Not wishing them anything negative but if negatives happen to the striking whiny-a$$ crybabies it is their own fault.
We call that talking out your arse. Get informed before you run that thing.
Your Master would agree! What rights do his slaves have right? 99 percent better than others in poverty! Wake up!
Imagine siding with a $100 billion dollar company (Boeing) over workers who are correctly bargaining on their own behalf.
The managers and other workers should also unionize and collectively bargain as well.
Boeing has been using their status as a major employer to exploit employees across the board. I for one hope the union workers get all they ask for. Brilliant timing on the strike as well! They have assured themselves the most leverage possible!
You apparently didn’t read the article. Boeing have lost $32B in the last five years. This is not a hugely profitable company refusing to distribute the wealth – if it was I’d agree with you. It’s a company with huge problems struggling to survive. We saw this sort of thing all over the place in the UK half a century ago, unions who didn’t care how much they destroyed – and the economy there took a huge hit from it. I have a big problem with businesses that make a fortune and give it all to their directors and shareholders, but that’s simply not the case here.
In 2018 boeing had around 50 BILLION in cash on hand. What did they do with it? Did they reward their workers for being so profitable? No, they bought 50 billion dollars worth of boeing stock to bump up the stock prices for the executives who have millions of shares.
Lol, at todays prices, that’s a huge loss for all involved.