Boeing shared on Wednesday that as a result of 30,000 machinists going on strike last week, halting production of its 737 MAX and other planes, it will temporarily furlough tens of thousands of employees.
The announcement comes as leaders for the worker’s union, the International Association of Machinists and Aerospace Workers, Boeing leadership, and federal mediators failed to come to an agreement on a labor contract. With the strike not expected to resolve soon, Boeing could lose millions of dollars due to the halt in production, and as a result, the company is taking action.
“We are initiating temporary furloughs over the coming days that will impact a large number of US-based executives, managers, and employees,” CEO Kelly Ortberg said in an email to employees. “We are planning for selected employees to take one week of furlough every four weeks on a rolling basis for the duration of the strike.”
The strike is the first for the company since 2008 when production halted for nearly eight weeks and resulted in a loss of $1.2 billion in net income.
Workers decided to walk off the job after 96% of the union’s members voted to strike down a deal that was praised as the best ever offered by the company.
The offer was for a four-year deal that included raises of at least 25% over the life of the deal, an immediate 11% pay hike, cost-of-living increases, increased contributions to 401(k) accounts, and lower health insurance premiums.
But now that the workers are on strike, Boeing is working to ensure it doesn’t take such a big hit, as Ortberg also said he and other company leaders would be taking “a commensurate pay reduction for the duration of the strike.”
The two parties met for mediation this week, but the union said it was frustrated with how talks were going on Tuesday, and on Wednesday it said they had made “no meaningful progress.”
“While we remain open to further discussions, whether directly or through mediation, currently, there are no additional dates scheduled,” the union said. “We are fully committed to fighting for the contract our members deserve.”
The union is pushing for a 40% raise over four years, well above the 25% raise offered by the company.
Now that Ortberg has announced the furloughs, it could be a sign that the company is preparing for a longer strike than previously believed.