Boeing to cut 17,000 jobs amid union deadlock and strikes
Boeing, the aircraft manufacturer, plans to lay off about 10 percent of its employees worldwide, including managers and directors. This decision was announced following unsuccessful negotiations with union representatives demanding raises.
Boeing announced that it would lay off about 10 percent of its global workforce, amounting to 17,000 people—CEO Kelly Ortberg informed employees on Friday. The company will also delay the launch of its 777X aircraft. Additionally, it announced that its sales figures for the third quarter will likely be much lower than analysts on Wall Street 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 layoffs should bring Boeing about $1.7 billion in savings. In her opinion, this may also be a sign of trouble 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 raises
Boeing's announcement coincides with issues the company is facing. Since September, employees in the USA have been on strike, demanding raises. Union representatives believe the amounts proposed by the company are too low. Bloomberg describes the negotiation situation as a deadlock, with neither side willing to give in. The negotiations between the unions and the company failed at the beginning of the week, and it is not clear if or when they will be resumed.
The strike involved about 33,000 employees who had not worked for about a month. As Bloomberg emphasizes, 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 labor relations threats," the union representatives pointed out in a statement.
On Friday, Boeing's shares gained a total of 3 percent after news of the layoffs. However, overall, the giant's stock has fallen by 42 percent since the beginning of the year.
