Boeing factory strike continues for more than a month with pressure on CEO.

It’s been a little over a month since we surpassed 30,000. boeing Mechanics have walked off the job after a temporary contract was overwhelmingly rejected. Since then, costs and tensions have grown.

The strike increases pressure on Boeing’s new CEO, Kelly Ortberg, who was brought in over the summer to address a range of problems at the aircraft maker. The strike, S&P Global Ratings estimates, is costing Boeing more than $1 billion a month and has led to two fatal Max crashes, starting with the near-catastrophic rupture of a 737 Max door plug. Six years after the incident, an already difficult year has come to an end. A renowned manufacturer in constant crisis mode.

The union and the company remain deadlocked, and aircraft production at plants in the Seattle area and elsewhere has been halted, leaving Boeing cash-strapped. Boeing last week withdrew a sweet contract offer that unions had rejected, saying it had not been negotiated.

Boeing officials had been optimistic about getting a deal done for airline customers weeks before the original vote, according to people familiar with the matter.

But that optimism was not realized, as workers voted 95% against the initial provisional labor agreement on September 13.

“They’re going to have to increase their offers, there’s no question about that,” said Harry Katz, a professor of collective bargaining at Cornell University’s Graduate School of Industrial and Industrial Relations. He said restoration of the pension system, one of the union’s demands, was unlikely and estimated the strike could last another two to five weeks.

The process of ending the strike was made more difficult when federally mediated talks broke down midweek.

Boeing said Thursday it had filed unfair labor practice charges with the National Labor Relations Board from the International Association of Machinists and Aerospace Workers, accusing it of negotiating in bad faith and misrepresenting the aircraft manufacturer’s offer.

Late Friday, John Holden, president of striking union IAM District 751, called for a return to negotiations.

“CEO Ortberg has an opportunity to do things differently instead of the same old, tired industrial relations threats used to intimidate and subdue anyone who stands up to him,” he said in a statement. “Ultimately, it will be our members who will decide whether a negotiated contract offer is accepted. They want a solution that is negotiated and addresses their needs.”

Boeing’s union mechanics are not getting paid and lost their company-sponsored health insurance at the end of September. However, unlike the 2008 Boeing factory strike, there were more contract workers in the Seattle area who could fill the void left by workers. Union bulletin boards post job opportunities such as food delivery service driving and warehouse work.

After the stock market closed on Friday, Ortberg said the company plans to reduce its global workforce by about 10% “over the coming months,” including layoffs of executives, managers and employees.

He also told employees that Boeing would stop producing commercial 767 freighters once it meets its backlog in 2027, and deliveries of the 777X would be delayed another year, to 2026.

These surprise cuts came alongside surprising preliminary financial results showing severe losses. Boeing said it expects a loss of about $10 per share in the third quarter, with costs of about $5 billion in its commercial and defense segments. The manufacturer has not made an annual profit since 2018. Ortberg faces investors on Oct. 23 in his first full earnings call as CEO.

“Once production of the 737 returns to normal, all the funding issues will be resolved, but we are not willing to be complacent to make that happen,” said Richard Aboulafia, managing director at AeroDynamic Advisory. “They’re laying off a lot of people who could make (stable production) possible. They’re kind of burning their own house down.”

Aboulafia estimates that the labor required for final assembly of an aircraft accounts for about 5% of the aircraft’s cost.

Ortberg is now tasked with freeing up cash and stemming the bleeding as the company’s losses mount. Boeing’s stock price fell 42% this year through Friday’s close, its steepest decline since 2008.

“We must focus our resources on performing and innovating in areas that are core to who we are, rather than spreading out too many efforts that may underperform and underinvest,” Ortberg said in a memo to employees Friday. . .

Last week, S&P Global Ratings warned the company that it was at risk of being downgraded to junk status because the halt in production of Boeing’s best-selling 737 Max and 767 and 777 planes would cost the company more than $1 billion a month. This estimate includes previously announced cost cuts, including furloughs, hiring freezes and suspension of most purchase orders for affected aircraft.

Bank of America aerospace analyst Ron Epstein wrote in a note last Friday that Boeing “faces problems with quality, labor relations, program execution and cash burn, which could lead to an ongoing doom loop cycle.” “It appears to have occurred,” he said. He said Boeing’s initial financial announcement on Friday is expected to result in up to $15 billion in capital raising.

The announced job cuts come after Boeing and the rest of its aerospace supply chain struggled to hire and train new mechanics and other professionals after buying out and laying off thousands of workers during the pandemic.

Boeing’s instability could spread to its suppliers. Boeing’s 737 fuselage manufacturer; Spirit AerosystemsThe spokesperson added that the company was considering furloughing workers under its cost-cutting contingency plan but had not yet made a decision. Boeing is in the process of acquiring the company.

“They’re probably telling us a story about cost cutting,” Aboulafia said of Boeing’s recent cost cuts. “When has something not working stopped you from trying again?”