The Boeing factory strike has lasted for one month, and the CEO is under increased pressure | Real Time Headlines

It has already exceeded 30,000 in just over a month. boeing company mechanic get off work After an overwhelming vote to reject tentative contract. Since then, costs and tensions have only grown.

The strike increases pressure on Boeing’s new chief executive Kelly OrtbergHe was brought in this summer to solve the aircraft manufacturer’s various troubles. S&P Global Ratings estimates the strike, which caps an already difficult year, is costing Boeing more than $1 billion a month. 737 maximum door stopper Six years ago, the first of two fatal Max crashes put the legendary manufacturer in trouble. crisis mode.

The union and the company remain at an impasse, and aircraft production has been idled at factories in the Seattle area and other locations, leaving Boeing short of cash. Boeing pulled out sweet treats last week contract quote The union rejected the request and said it was not negotiated.

In the weeks leading up to the initial vote, Boeing officials had expressed optimism that airline customers could reach a deal, people familiar with the matter said.

But this optimism did not materialize, and on September 13, workers voted 95% against the original tentative collective bargaining agreement.

“They have to raise their offer. There’s no doubt about it,” said Harry Katz, a professor at Cornell University’s School of Industrial and Labor Relations who studies collective bargaining. But he said one of the union’s demands, the reinstatement of the pension scheme, was unlikely to materialize and estimated the strike could last another two to five weeks.

The process of ending the strike has become more fraught, with federally mediated talks breaking down in midweek.

Boeing Co said Thursday it has filed unfair labor practice charges with the National Labor Relations Board, accusing the International Association of Machinists and Aerospace Workers of negotiating in bad faith and misrepresenting the planemaker’s proposals.

On Friday evening, Jon Holden, president of the striking workers’ union IAM District 751, urged a return to negotiations.

“CEO Ortberg has an opportunity to do things differently, rather than using the same old industrial relations threats to intimidate and repress anyone who dares to resist,” he said in a statement. “Ultimately, it will be up to our Members decide whether to accept any negotiated contract offer and they want a solution that is negotiated and meets their needs.”

Boeing’s unionized machinists did not receive pay and lost company-backed health insurance in late September. However, unlike the last Boeing factory strike in 2008, there are more contract jobs available in the Seattle area to help workers fill gaps. Union message boards post job opportunities such as driving food delivery services and warehouse jobs.

After the market closed Friday, Ortberg said the company plans to Cutting the global workforce About 10% of the workforce will be cut “in the coming months,” including cuts to senior executives, managers and employees.

He also told employees that Boeing would stop production of the commercial 767 freighter after completing its backlog of orders in 2027, while 777X deliveries would be delayed by another year, to 2026.

The unexpected cuts come amid surprise preliminary financial results that show deepening losses: Boeing said it expects to lose nearly $10 a share in the third quarter and will take about $5 billion in charges to its commercial and defense units. The manufacturer has not posted an annual profit since 2018.

“The problem is, once 737 production is on track, all the funding issues are solved, but they’re not willing to settle for anything less than achieving that goal,” said Richard Aboulafia, managing director at AeroDynamic Advisory. “They’ve laid off a lot of people who could have achieved stable production. . It looked like they were burning down their own house.”

Aboulafia estimates that labor in the aircraft assembly process accounts for about 5% of the cost of the aircraft.

With the company’s losses piling up, Ortberg is now tasked with raising cash and stemming the bleeding. As of Friday’s close, Boeing shares had fallen 42% this year, their biggest drop since 2008.

“We also need to focus our resources on performance and innovation in our core areas rather than spreading ourselves across too many efforts, which often results in underperformance,” Ortberg said in a note to employees on Friday. and underinvestment.

S&P Global Ratings warned the company last week that it was at risk of being downgraded to junk status as the suspension of production of Boeing’s best-selling 737 Max and its 767s and 777s cost the company more than $1 billion a month. This estimate includes previously announced cost cutting Examples include temporary furloughs, a hiring freeze and the suspension of purchase orders for most affected aircraft.

Bank of America aerospace analyst Ron Epstein said in a note on Friday that Boeing “is facing quality, labor relations, program execution and cash burn issues that appear to have created an ongoing doom cycle.” He said early financial reports released by Boeing on Friday could indicate that up to $15 billion in equity financing is in the works.

The layoff announcements come as Boeing and others in the aerospace supply chain work to hire and train new mechanics and other specialists in the post-pandemic era Acquisitions and layoffs Thousands of employees.

Boeing’s instability could spill over into its suppliers. Boeing 737 airframe manufacturer, spirit aerospace systems inc.A spokesman said furloughing staff was being considered as part of a cost-cutting contingency plan, but no decision had been made yet. Boeing is handling buy that company.

“They may be telling us a story about cost savings to help them get through this,” Aboulafia said of Boeing’s latest cost-cutting plan. “When did something go wrong that made them stop trying?”