(Reuters) - Spirit AeroSystems (SPR.N)
told employees on Friday that it will furlough 700 workers for 21 days as an over one-month-long strike at U.S. planemaker Boeing (BA.N) eats into the supplier's cash and inventory space.
The furloughs, first reported by Reuters, will affect Spirit Aero employees working on Boeing's 767 and 777 widebody jet programs. Production of those jets was halted during the strike by more than 33,000 U.S. West Coast factory workers since Sept. 13.
The furloughs follow other Spirit efforts to cut costs, including a hiring freeze and travel and overtime restrictions.
Spirit said in a statement on Friday it does not have room for additional storage of the 767 and 777 fuselages it builds.
"We recognize the impact this has on our valued teammates and their families, and we are committed to supporting them through this period," said Spirit CEO Pat Shanahan.
Boeing suppliers, who invested heavily on materials and tooling to support the planemaker's planned ramp-up of jets, have been furloughing workers in recent weeks and holding off on investments due to the strike.
Wichita, Kansas-based Spirit Aero also warned it would have to lay off workers and announce additional furloughs if the strike continues past November, Spirit spokesperson Joe Buccino said.
Boeing declined to comment.
Boeing and its supply chain have weathered a series of crises over the last six years, including a 737 MAX safety grounding after two fatal crashes, the global pandemic, and a quality crisis since the blowout of a door plug in January.
Boeing furloughed thousands of salaried employees on a rolling basis after the strike began but cancelled those last week after it announced plans to cut 10% of the company's workforce, or about 17,000 jobs.
Spirit Aero's second-quarter losses more than doubled. One industry source familiar with the matter said the company has scaled back production of 737 MAX fuselages from 31 a month to 21 a month in August, September and October, and may have to reduce further. Boeing has been checking in regularly with Spirit Aero over its finances, a second source said.
Spirit has fully drawn a $350-million bridge term loan facility set up when Boeing agreed to acquire its supplier, and it is expected to be asking for additional help from the planemaker, the source said.
Spirit declined to comment on its loan facility and output.
Since March, Boeing has been inspecting the new fuselages at Spirit's Kansas factory and vetting has taken longer than expected, a third industry source said. The delays had already slowed deliveries of 737 MAX fuselages from Spirit to Boeing's Renton, Washington, factory.
The delays and the strike have made it less likely that Boeing will meet its goal to produce 38 MAX jets a month by the end of 2024, up from 25 jets a month in July.
During the strike, Spirit Aero has increased inspections of 737 MAX fuselages at its factory so more will be ready when the stoppage ends, Buccino said.
Spirit Aero shares dipped 0.6% in morning trading, but are on pace for a weekly gain.
New York Community Bancorp (NYCB.N) unit Flagstar Bank will lay off around 1,900 employees, the U.S. regional lender said on Thursday, amid efforts to turn around its struggling business.
Flagstar announced around 700 job reductions and said an additional 1,200 jobs will be cut after it completes the sale of its mortgage servicing unit to non-bank mortgage platform Mr. Cooper (COOP.O).
NYCB said it anticipates finalizing a $1.4 billion sale of the unit to Mr. Cooper in the fourth quarter of 2024, adding that the majority of employees impacted by the layoffs will be able to work for Mr. Cooper.
NYCB came under pressure after it reported increased stress in its commercial real estate portfolio in January, which also rekindled concerns over the health of the sector recovering from the failures of a slew of regional banks in 2023.
NYCB, which on Tuesday said it will rename itself as Flagstar Financial, acquired Flagstar Bank in 2021 for $2.6 billion.
Japan's largest labour union group said on Friday it will seek wage hikes of at least 5% in 2025, similar to this year's hefty increase, although economists doubt that another such bump is realistic.
The announcement by Rengo means debate about pay rises for next year will begin in earnest. Prime Minister Shigeru Ishiba, who took office this month, has made wage hikes a top priority, seeking to help support a still fragile economic recovery.
The Bank of Japan will also scrutinise annual wage negotiations. It's keen to see solid wage growth underpin the economy as it moves to normalise its ultra-easy monetary policy.
Japanese companies agreed to an average 5.1% wage hike earlier this year, the biggest increase in three decades, following a 3.5% rise last year, according to Rengo. The union group has about 7 million members.
"We aim to keep wages, the economy and prices on a stable track to prevent a return to deflation," Rengo President Tomoko Yoshino told a news conference.
Many economists are sceptical.
"We expect the level will be around 4% to 4.5% because inflation has stabilised and doesn't need to be reflected so much in wages," said Keiji Kanda, a senior economist at the Daiwa Institute of Research.
Inflation-adjusted wages in Japan turned up in June for the first time in more than two years but slipped again in August.
Rengo said in a statement it will focus on achieving wage hikes at smaller firms, setting a target of at least 6% to narrow the income gap with workers at large firms.
Kazutaka Maeda, an economist at Meiji Yasuda Research Institute, said, however, that some smaller firms have little financial leeway after lifting wages to cope with labour shortages.
The BOJ also warned in a recent report that some small and medium-sized firms were struggling to earn enough profits to hike wages, a development that "required vigilance."
Maeda expects wage growth next year to be at least 4.5% but short of 5%. That would be substantial enough to keep alive expectations of further rate hikes, he said.
Rengo will finalise its position on next year's wage negotiations in December. Around March, management at major firms meet with unions for wage talks.
Japanese wages were stagnant for decades until 2022 when rising raw material costs pushed up inflation and piled pressure on firms to compensate employees with higher pay.
One of Amazon's (AMZN.O) top executives defended the new, controversial 5-day-per-week in-office policy on Thursday, saying those who do not support it can leave for another company.
Speaking at an all-hands meeting for AWS, unit CEO Matt Garman said nine out of 10 workers he has spoken with support the new policy, which takes effect in January, according to a transcript reviewed by Reuters.
Those who do not wish to work for Amazon in-office five days per week can quit, he suggested.
"If there are people who just don't work well in that environment and don't want to, that's okay, there are other companies around," said Garman.
"By the way, I don't mean that in a bad way," he said, adding "we want to be in an environment where we're working together."
"When we want to really, really innovate on interesting products, I have not seen an ability for us to do that when we're not in-person," said Garman.
The policy has upset many of Amazon's employees who say it wastes time with additional commuting and the benefits of working from the office are not supported by independent data.
Amazon has been enforcing a three-day in-office policy, but CEO Andy Jassy said last month the retailer would move to five days to "invent, collaborate and be connected."
Some employees who had not been previously compliant were told they were "voluntarily resigning" and were locked out of company systems.
Amazon, the world's second-largest private employer behind Walmart, has taken a harder line on returning to office than many of its technology peers such as Google, Meta and Microsoft who have two- to three-day in-office policies.
"I'm actually quite excited about this change," said Garman. "I know not everyone is," he said, noting it's too hard to accomplish the company's goals with only the mandatory current three days of in-office work.
Garman said under the three-day policy, "we didn't really accomplish anything, like we didn't get to work together and learn from each other," because people may be in offices on different days.
In particular, Garman said the company's leadership principles, which dictate how Amazon ought to operate, were difficult to follow with just a three-day-per-week requirement.
"You can't internalize them by reading them on the website, you really have to experience them day-to-day," he said.
One, "disagree and commit" -- which is understood to mean that employees can express grievances but then should dive into a project as outlined by leaders -- is not ideal for remote work, Garman said.
"I don't know if you guys have tried to disagree via a Chime call," he said, referring to the company's internal messaging and calling function. "It's very hard."