Boeing has unveiled a series of sweeping cost-cutting measures, including temporary layoffs, to mitigate the financial impact of the ongoing labor dispute, which has brought production to a grinding halt.
The move comes as thousands of union workers continue to picket around the clock since the strike began two weeks ago.
As part of the cost-cutting initiative, the company will go on a temporary hiring hiatus, CNN reported citing a memo from the Boeing Chief Financial Officer Brian West on Monday.
West's memo outlined a series of other austerity measures including restrictions on non-essential travel, and potential furloughs for employees, managers, and executives in the coming weeks. The company is also slashing expenses, such as charitable contributions, catering, and participation in trade shows and events to save costs.
However West said Boeing will continue to invest in safety, quality, and customer service while putting cost-management methods into place, CBS reported.
"This strike jeopardizes our recovery in a significant way, and we must take necessary actions to preserve cash and safeguard our shared future," West wrote, noting the company's negotiations with the two unions representing workers. "Importantly, we will protect all funding for safety, quality and direct customer support work."
Boeing is also planning to reduce spending with some of its 10,000 suppliers, West said in his memo.
"[We] will stop issuing the majority of supplier purchase orders on the 737, 767 and 777 programs," he wrote.
Boeing's financial health is in jeopardy due to its startling $33 billion in losses since 2019. This vulnerability was exacerbated by the warning issued on Friday by credit rating firms Fitch and Moody's that Boeing's credit rating may be lowered to that of a junk bond.
The labor dispute between Boeing and the International Association of Machinists and Aerospace Workers (IAM) has resulted in a strike by 33,000 workers. Ten years of pay stagnation is the root cause of Boeing's labor issue. Citing inadequate compensation and benefit reductions, workers rejected a 25% wage rise, resulting in the walkout and federal mediation to end the contract deadlock.
The strike materialized after 95% of rank-and-file members rejected the deal, and 96% voted in favor of striking, effectively shutting down production at one of America's largest manufacturers and exporters.
The massive labor strike is another blow for Boeing, which is already reeling under a range of manufacturing issues and investigation by federal regulators this year.
