ST. LOUIS â Boeing Co. said on Monday it is considering companywide pay cuts and reductions in supplier spending as it continues to struggle with a union strike idling operations on the West Coast.
The company is considering furloughs for employees, âsignificant reductionsâ to supplier spending and a halt to most purchase orders on the 737, 767 and 777 planes, it told employees in an email on Monday.
âThis strike jeopardizes our recovery in a significant way and we must take necessary actions to preserve cash and safeguard our shared future,â Chief Financial Officer Brian West wrote in a message to all Boeing employees. The aerospace company is âin a difficult period.â
Boeing operates its defense business, which is in a separate unit from the companyâs commercial plane segment, in the St. Louis area. There are about 15,000 Boeing workers here.
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âThe actions noted in the memo are applicable across the company,â said Boeing spokesperson Deborah VanNierop when asked about the impact on St. Louis operations.
VanNierop did not say when such cuts would start or how they would directly affect local operations.
Last week, Boeing announced it had reached a tentative agreement with the union, the International Association of Machinists and Aerospace Workers.
But on Thursday, more than 94% of IAM districts 751 and W24 voted to reject the proposal, which included a pay raise of 25% over four years. Workers were asking for higher wages, secure retirement, improved medical coverage, job security, paid time off and overtime, among other things.
On Friday, roughly 33,000 members walked off the job at Boeingâs Seattle facilities. The work stoppage continued over the weekend.
On Monday morning, Boeing sent the companywide email.
Also on Boeingâs cost-cutting list is a pause on pay increases associated with internal executive and management promotions, pausing non-critical travel for employees, eliminating first- and business- class options, suspending nonessential capital expenditures and facilities spending, suspending outside consultation and temporarily firing nonessential contractors.
Boeing will also pause charitable contributions, advertising and marketing spending, reduce its participation in airshows, trade shows and special events, halt employee recognition and team event spending, stop catering food at Boeing facilities and cancel off-site team meetings.
âI know that these actions will create some uncertainty and concern, as well as many questions,â West wrote. He said more information will be shared in the coming days.
Richard Aboulafia, managing director at consulting firm AeroDynamic Advisory in Michigan, said that because Boeingâs commercial and defense arms operate as different units, they have different unions and workforces. He said he doesnât see immediate impacts to St. Louis operations.
However, some commercial jetliners made by Boeing support its defense manufacturing. Aboulafia said the KC-46 Pegasus air tanker comes from its 767 commercial model, and its P-8 Poseidon maritime patrol aircraft is the 737 plane. Still, only about two of each model are manufactured each month, and theyâre made on the West Coast, Aboulafia said.
Boeingâs commercial 777-9 jet also boasts wing and tail parts made in St. Louis. The company expects to deliver the 777-9s to customers in 2025.
DeLane Adams, the unionâs assistant communications director, said on Monday he hadnât yet heard how Westâs message might impact Boeing workers in St. Louis.
The union and Boeing will meet again this week to resume negotiations.