Thirty thousand Boeing employees on Wednesday must start taking vacation or sick time, or apply for unemployment, after the region’s largest private employer decided Sunday to keep its Puget Sound plants closed indefinitely.
The workers had been paid during the initial two-week work stoppage that began March 25, when Boeing closed its local factories to grapple with the spread of COVID-19, the disease caused by the novel coronavirus.
The company told employees Sunday in an email it “is extending the temporary suspension of operations at all Puget Sound area and Moses Lake sites until further notice.”
Boeing has roughly 70,000 employees in the state. The decision affects about 30,000 of them, mostly production workers. Other employees who can work from home will continue to do so, and volunteer employees will continue to maintain essential services at the plants.
Boeing’s decision comes as Washington state continues to report increasing numbers of coronavirus cases, though at a slower rate than some other areas of the country. On Sunday, state Department of Health officials confirmed an additional 393 cases and 28 deaths from COVID-19, bringing the state total to 7,984 cases and 338 fatalities. The bulk of the cases remain in King County, where 3,158 people have fallen ill and 208 have died.
Boeing said its decision was based on its “continuing focus on the health and safety of its employees, current assessment of the spread of COVID-19 in the state, the reliability of the supply chain, and additional recommendations from government health authorities.”
The company is paying employees their regular salaries only through Tuesday, the two-week mark of the shutdown, said Boeing spokesman Bernard Choi. From then on, employees not working can use paid time off — either vacation or sick leave.
According to state Employment Security guidelines, employees should also be eligible for unemployment benefits. A fact sheet on the agency’s website states when a company shuts down “due to a business slowdown” or “due to a quarantine,” its employees are eligible for unemployment insurance.
However, the state’s unemployment application process has been bogged down by an unprecedented number of claims, and officials have said delays for new applicants are likely.
Choi said Boeing will continue to provide medical benefits for all employees during the work stoppage.
While stopping wages for more than 30,000 employees will stanch some of Boeing’s cash outflow, with virtually no commercial airplane revenue coming in during the indefinite shutdown, the company’s financial crisis will continue.
Before the coronavirus hit, Boeing had been slammed financially by the ongoing grounding of the 737 MAX for more than a year. The company burned through $8.3 billion in the last three months of 2019 as it continued building more of those jets but couldn’t deliver any.
Since then, the spread of the virus has ended all Puget Sound production, reduced global air travel to a trickle, and pushed Boeing’s airline customers to seek government aid to avoid going out of business.
Boeing has $15 billion in cash on hand, but it will need more given the breathtaking scale of the airline downturn.
The shock to the airlines is evident in a memo Friday to Alaska Airlines pilots sent by Capt. John Ladner, vice president of flight operations. Ladner wrote that the previous day the airline carried 4,600 passengers on 297 flights.
That’s an average of just 15 people on each flight. On the same day last year, Alaska carried 99,500 passengers on 780 flights.
The tremendous airline collapse means Boeing faces an indefinite period of very low demand for aircraft. Even when production restarts, many airlines won’t want to take the jets they had previously ordered.
On Friday, big airplane lessor Avolon canceled orders for 75 MAXs, worth about $3.8 billion. Because of the delay in delivering the MAX, many customers will be able to cancel orders for that plane with no penalties.
Airplane lessors supply jets to airlines all over the globe, making them leading indicators of where the market is going. That suggests more MAX cancellations are likely ahead.
In March, Boeing asked the government to provide $60 billion in bailout funds to the industry, including its supply chain, to enable it to survive the coronavirus crisis.
Yet Boeing CEO Dave Calhoun has said he doesn’t want a bailout with too many strings attached. He said he won’t accept the government taking an ownership stake in Boeing.
Last week, Boeing Commercial Airplanes CEO Stan Deal announced voluntary buyouts to reduce the size of the workforce, and warned employees to expect “a different-sized commercial market,” implying a significantly smaller one, after the virus emergency is over and recovery begins.
Deal told employees Sunday the decision to continue the suspension of production put the priority on “the health and safety of our employees, their families and our communities.”
To decide how long the work stoppage continues, Deal said, Boeing’s leadership will listen to the views of its employees as well as assessing the advice of government health officials in light of “the spread of the coronavirus in the local community.”
Deal said the company will also have to consider the health of the company’s supply chain before it can “ensure we are ready for a safe and orderly return to operations.”
Growing number of COVID-19 infections
Boeing figures released internally Saturday show that as of the previous evening, the company had 133 confirmed cases among employees worldwide, up from 118 a day earlier and from 73 one week earlier.
Of that total, 95 employees are in Washington state, up from 54 a week earlier.
This data also shows in the first three days of April, 34 new COVID-19 cases were reported among Boeing’s workforce. Though local production was shut down and workers sent home March 25, Washington state employees accounted for 21 of those new cases.
According to Boeing’s breakdown of those new cases, 14 of those work at the Everett widebody jet plant. Based on contact tracing interviews with the employees after they reported a positive test, the company said it believes only six were infectious while working inside the plant, while eight others “were not in the workplace when they were infectious.”
Everett has seen by far the majority of cases — and Boeing’s first COVID-19 death, 57-year-old quality control inspector Elton Washington.
The new cases this month also include five employees at Boeing’s commercial jet manufacturing complex in North Charleston, South Carolina, and five more at its defense facility in St. Louis.
Both those facilities, which are in communities hit less hard by COVID-19 than the Puget Sound region, remain open.
However, Boeing’s Ridley Park helicopter manufacturing plant in the Philadelphia area was shut down Thursday for two weeks. On Sunday, the death toll from COVID-19 in Philadelphia had climbed to 43.
In an internal update Sunday to Boeing’s COVID-19 statistics, just four new cases were added companywide. It’s unclear if this represents a genuine slowdown in the infection rate or a lack of reporting over the weekend.
The message’s reference to “additional recommendations from government health authorities” appears to be an allusion to Friday’s new guidance from the Centers for Disease Control and Prevention that encourages people to cover their faces while out and about near others.
Earlier Friday, a management conference call briefed Boeing front-line managers, telling them a return to work Wednesday was still the plan. In that call, managers were told that due to a scarcity of personal protective equipment (PPE) such as masks and gloves, Boeing would not provide PPE to everyone in the factory, only to those in certain confined work areas.
That stance had already provoked anger among some workers and opposition from the union. Jon Holden, president of District 751 of the International Association of Machinists (IAM), in an interview Saturday expressed “great concern that Boeing is asking people to work in conditions that will simply continue to pass the virus along.”
The new CDC guidance might have made Boeing’s position on PPE untenable.
Sunday’s message to employees states “as the suspension of operations continues, Boeing will continue to monitor government guidance and actions on COVID-19, and its associated impact on all company operations.”