The ever-worsening Boeing situation has taken a turn for the worse. Despite the initial hope that the company would be able to reach a deal with the striking workers, Boeing is being forced to consider mass layoffs. In a memo to employees, CEO Kelly Ortberg announced that Boeing was looking at 17,00 job cuts that were necessary for the company “to align with [their] financial reality.”
What does this mean for the organization? Boeing is looking at a 10% workforce cut in order to bring the situation back under their control.
The Boeing layoffs occurring amidst the strike reflect poorly on the company’s ability to maintain relationships with its employees but considering the situation the organization is currently in, it is a tough call that the higher-ups are willing to take in order to restart productions and fulfill the existing agreements it has with clients and suppliers.
Boeing Announces Mass Layoffs—Will This Be Enough to Set the Company Back on Track?
Boeing’s announcement of mass layoffs has come as a shock to many due to the scale of its job cuts, but few are surprised that the plane maker has chosen to take this route. The 10% workforce cuts at Boeing “will include executives, managers, and employees,” according to Ortberg. The CEO himself joined the organization after the ousting of former head Ted Colbert, but there has hardly been room to make decisions that help the organization move forward, with all efforts currently geared towards damage control.
Before Boeing announced the 17,000 job cuts, it had already enforced rolling temporary furloughs on a section of employees. The furlough will now be suspended in favor of the layoffs. The organization has also announced that the first batch of the upcoming 777X planes will be delayed to 2026 rather than the initial expectation of its release in 2025.
Additionally, production for the 767 cargo jet will cease entirely after Boeing completes all its existing orders. This announcement could lead to further strain on negotiations, in addition to Boeing’s layoff announcement amid the strike.
Analysts have suggested that the striking workers at Boeing may return to their jobs within the week. These workers are dealing with a temporary stoppage of pay with the strike but refusing to work now that Boeing’s mass layoffs have been announced could mean a permanent end to their jobs.
Boeing has Had a Rough Year, with the Workers’ Strike Only Painting One Part of the Picture
Boeing and over 33,000 of its workers associated with the International Association of Machinists have been at odds with each other over the renegotiation of a new contract deal. According to CNN, the strike, which almost came to an end but then fell through after Boeing retracted its offer, has cost the company almost $5 billion USD already.
The company’s workers and shareholders are reported to make up the bulk of the strike losses at $3.7 billion USD. The report continues to explain that productions have been halted entirely at the Everett, Washington center due to the strike, leaving the company unable to make good on its deals with customers.
At multiple points in the last month, it had appeared that negotiations between Boeing and the striking workers were drawing to a close but the organization failed to offer a deal that was satisfactory to the IAM. As recently as last week, the parties were engaged in a federally mediated negotiation but the company claimed the union was not seriously considering the proposals that were being made.
IAM president of District 751, John Holden, claimed that there was still room for a deal to be struck and for the negotiations to culminate into something concrete, but we have seen no signs to suggest a peaceful and prompt resolution is on the horizon. The financial impact of the Boeing strike has solidified the company’s decision to turn to job cuts.
Boeing has had a very rough decade, but things have worsened over the last year with reports of plane crashes, malfunctions, regulatory scrutiny over build quality, and multiple lapses in airline build security. Multiple whistleblowers at the organization also came out to publicize some of the unsafe practices at the organization, and the company has even agreed to plead guilty to a felony conspiracy to commit fraud.
What’s Next Boeing?
These systematic issues, paired with the workers’ strike, have set the company back significantly in meeting its targets and regaining control over the narrative. Boeing’s plan of cutting 10% of the workforce is going to have a massive impact on the organization and its negotiations with the striking workers.
Reuters has reported that the organization is looking into the possibility of raising billions of dollars through the sale of stocks and equity-like security but we’ll have to see how successful they are and to what extent it helps them through their current battles.
Boeing’s mass layoffs as well as the gathering of funds to support operations could help the business get back on track, but the organization will have to go a long way to rebuild its reputation and overall customer relationships.
