The aftermath of the Boeing Strike
November 12, 2024
The strike by District 751 of the International Association of Machinists and Aerospace Workers saw October deliveries reduced to just 14 commercial airliners, including nine 737 Max aircraft, compared to 34 jetliners in October 2023. This was the lowest monthly total since November 2020 (at the height of the COVID pandemic, and during a worldwide grounding of the best-selling 737 Max), and contributed to the company’s record-breaking US $6 Bn losses in the last Quarter. The strike affected production of the 737, 767 and 777 and of the military E-7A, P-8A and KC-46, in the Pacific North West (Washington state and Oregon). Production of the Boeing 787 Dreamliner continued largely unaffected, because the Model 787 are made in a non-unionised factory in South Carolina.
Sales also continued, and Boeing booked 63 aircraft sales in October (two less than September’s total), including 40 737 Max 8s for the Avia Solutions Group.
Boeing has said that a full production restart will take weeks after the more than seven-week machinists’ strike. Boeing CEO Kelly Ortberg noted that: “It’s much harder to turn this on than it is to turn it off, so it’s absolutely critical that we do this right.” The company is therefore focused on avoiding potential hazards, understanding the machinist’s duties, while meeting safety requirements, and ensuring that training qualifications are up-to-date as machinists return to work.
Any production ramp-up will be complicated by the fact that the Federal Aviation Administration (FAA) has put Boeing “on notice” that it must only accelerate production rates of the 737 Max carefully and methodically, in order to maintain safety and quality. This follows the blowout of a MAX door plug on an Alaska Airlines 737 Max (Flight 1282) in January. The FAA issued a statement saying that it “will further strengthen and target our oversight as the company begins its return-to-work.”
Even though the Boeing machinists’ strike has come to an end, the company’s difficulties are continuing. Boeing stock has fallen by 42.5% during 2024, so far, and is continuing to reduce in value. Amid massive financial losses, Boeing is embarking on an energetic and painful cost-cutting campaign, and this is set to include laying off some 10% of the company’s global workforce. The layoffs will target ‘overhead’ and ‘non-essential’ positions, though some engineers and production workers are also expected to face redundancy.
During October’s earnings call, Boeing CEO Kelly Ortberg said that: “We’re going to really focus this workforce reduction in streamlining those overhead activities, consolidating things that can be consolidated. I wouldn’t think of it like we’re going to take people off production or out of the engineering labs. That’s not our intent.”
But Boeing insiders have revealed that research and development work, and production programmes will be impacted. There will be (for example) a roughly 10% reduction in engineers supporting military programmes at St Louis, including the F-15EX, F/A-18E/F, and T-7A.
While only about 5% of production jobs are expected to be cut, those who “are not holding a wrench, are considered overhead” and may face “about 30%” job losses.
“We continue to take a tough, but necessary actions to preserve cash and safeguard our future,” Ortberg insists. “We’ve worked across our supply chain partners to significantly reduce expenditures, while balancing the associated trade-offs. We shared plans to reduce our workforce to align with our financial reality and a more focused set of priorities. We’re decisively implementing reductions to our discretionary spending across the company. As we move through this process, we’ll maintain our steadfast focus on safety, quality, and delivery for our customers.”
The Society of Professional Engineering Employees in Aerospace has been warned to expect 60-day layoff notices to be issued to its members from Friday 16 November.
