By Naveen Athrappully
Boeing supplier Spirit AeroSystems is furloughing hundreds of workers, with the company warning that more temporary dismissals and even layoffs could be on the cards.
Since Sept. 13, about 33,000 unionized employees at Boeing have been on strike after workers rejected the company’s proposed pay hike of 25 percent over a four-year period.
On Friday, Spirit AeroSystems announced it will furlough employees “in response to the ongoing strike by Boeing employees represented by the International Association of Machinists and Aerospace Workers (IAM).”
“Effective October 28, Spirit will implement a 21-day furlough for approximately 700 employees working on the 767 and 777 programs,” it said. “These furloughs are in combination with a series of other cost savings measures, including a hiring freeze and travel and overtime restrictions.”
The company pointed out it has built up a “significant inventory buffer” for Boeing 767 and 777 models and that it does not have any more additional storage space. Spirit AeroSystems provides fuselage structure and other components for these aircraft.
If the strike continues beyond November, the company may implement more cost-saving measures, including additional furloughs and layoffs, it said.
“This difficult step was necessary given our limited storage capacity for 767 and 777 units,” said Spirit AeroSystems CEO Pat Shanahan. “We recognize the impact this has on our valued teammates and their families, and we are committed to supporting them through this period.”
Boeing and its striking employees have made progress in negotiations. IAM said it has received a new contract offer from the company promising a 35 percent wage increase over four years, incentive pay, retirement contribution, and other benefits, according to an Oct. 19 press release by the group.
The union members plan to vote on whether to accept the proposed offer on Oct. 23. IAM district presidents Jon Holden and Brandon Bryant said in a joint statement that the proposal would be “carefully reviewed and voted upon by the frontline workers of Boeing.”
“The workers will ultimately decide if this specific proposal is sufficient in meeting their very legitimate needs and goal of achieving respect and fairness at Boeing,” they said.
Boeing Strike and Layoffs, FAA Assessment
After submitting the new contract offer to workers, Boeing said it was looking forward to “employees voting on the negotiated proposal.”
The strike has attracted the attention of lawmakers. On Oct. 15, a group of Democrats wrote a letter to Boeing and the district IAM unions, calling for both parties to reach a mutually beneficial resolution and end to the strike.
“With over 42,000 single-aisle and wide body commercial aircraft projected to be manufactured over the next twenty years, valued at $8 trillion, now is the time to rebuild the historic partnership between management and workers in order to restore Boeing’s reputation for engineering and manufacturing excellence,” the letter said.
According to IAM, Acting U.S. Labor Secretary Julie Su met with Boeing officials last week, which helped boost discussions between both sides.
Credit rating agency Fitch warned last month that Boeing’s investment-grade rating would be at risk if the worker strike continued for much longer.
Amid the strikes, Boeing recently announced plans to lay off 10 percent of its workforce in the coming months. About 17,000 jobs will be slashed as part of the workforce reduction plan.
The layoffs follow a hiring freeze instituted in mid-September and the cessation of nonessential spending.
Meanwhile, the Federal Aviation Administration (FAA) announced on Friday that it is planning a new safety review of Boeing.
In January, the door plug of a 737 Max 9 fuselage tore off mid-air, forcing the plane to make an emergency landing, with passengers sustaining injuries. Following this incident, the FAA conducted a six-week audit of the company and Spirit AeroSystems, saying it found “multiple instances where the companies allegedly failed to comply with manufacturing quality control requirements.”
The new review will probe issues such as risk-assessment quality, resource allocation, and adherence to regulatory requirements, and is expected to take three months, the FAA said. A spokesperson said the agency plans regular reviews of Boeing.
Reuters contributed to the report.
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