Boeing begins furloughing ‘large number’ of workers during strike

Boeing will temporarily furlough thousands of U.S. executives, managers and other workers amid the ongoing machinists strike as the company tries to save money, CEO Kelly Ortberg told employees Wednesday.

According to a company spokesperson, the forced furloughs will affect tens of thousands of Boeing employees.

The plan was drafted less than a week after Boeing’s 30,000-plus machinists in the Seattle and Oregon region overwhelmingly rejected a new labor contract, with 96 percent voting to strike. They walked off the job just after midnight Friday.

Negotiations between the two sides continued this week with a mediator. Boeing had offered a 25% wage increase, and the union supported the tentative contract. But some workers told CNBC that the contract offer was rejected because the wage increases were not enough to offset rising costs of living in the Seattle area and did not restore their pensions.

“We will not mince our words: after a full day of mediation, we are frustrated,” the union said in a statement on Tuesday.

Ortberg, who has been on the job for just under six weeks, said in a staff memo that affected employees would take one week of unpaid leave every four weeks for the duration of the strike and that he and his team would take an “appropriate” pay cut during the strike.

“While this is a difficult decision that impacts everyone, it is an effort to secure our long-term future and help us navigate this very difficult time. We will continue to communicate transparently as this dynamic situation evolves and do everything we can to minimize this hardship,” Ortberg said in his message.

Boeing CFO Brian West said earlier this week that the company would freeze hiring and hiring to cut costs and temporarily lay off “non-essential contractors.”

The financial impact of the strike depends on how long it lasts, West said, but it increases the pressure on Boeing leaders as they try to steer the company out of a safety and quality crisis, including the fallout from a near-catastrophic door-slam in January and a $60 billion debt.

Ortberg said “activities critical to our safety, quality, customer service and important certification programs are prioritized and will continue,” including production of the 787 Dreamliners, which are made at a non-union factory in South Carolina.