Boeing announces major layoffs amid union disputes and delays
Boeing, the aircraft manufacturer, plans to lay off approximately 10 per cent of its employees worldwide, including managers and directors. This decision was announced following unsuccessful negotiations with union representatives demanding pay increases.
Boeing announced that it would lay off around 10 per cent of its global workforce, which equates to 17,000 people—CEO Kelly Ortberg informed employees on Friday. The company will also delay the launch of its 777X aircraft. It additionally announced that its sales figures for the third quarter are likely to be much lower than Wall Street analysts had predicted.
Boeing to lay off 17,000 people
"Our business is in a difficult position, and it is hard to overstate the challenges we face together. Restoring our company requires tough decisions, and we will have to make structural changes to ensure we can stay competitive and deliver for our customers over the long term," Ortberg wrote in a memo to employees, as quoted by Bloomberg.
Analyst Sheila Kahyaoglu, quoted by the agency, calculated that the redundancies should bring Boeing approximately £1.3 billion in savings. In her opinion, this may also be indicative of difficulties in other companies. "The workforce reductions are what we have seen across smaller suppliers earlier this week, signaling more to come across," Kahyaoglu wrote.
Boeing employees want pay increases
Boeing's announcement coincides with the problems the company is facing. Since September, employees in the USA have been on strike, demanding pay rises. Union representatives believe the amounts proposed by the company are too low. Bloomberg describes the negotiation situation as a stalemate, with neither side willing to concede. The negotiations between the unions and the company broke down at the beginning of the week, and it is not even known if or when they will resume.
The strike involved about 33,000 employees who had not worked for about a month. As Bloomberg emphasises, this is devastating for the company's production. In response to the layoff announcement, the union representing machinists and aerospace workers reminded everyone that the way to resolve the strike situation was to "stay at the table." "CEO Ortberg has an opportunity to do things differently instead of the same old tired labour relations threats," the union representatives pointed out in a statement.
On Friday, Boeing's shares gained a total of 3 per cent after news of the layoffs. However, overall, the company's stock has fallen by 42 per cent since the beginning of the year.
