Low on funds A machinist strike that is still going strong is putting Boeing in financial danger as employees demand better wages. The cost of failing to close a contract might be substantially higher.
Picketing Boeing machinists told CNBC that if the strike continues much longer, they have saved money and are thinking about taking on side jobs in landscaping, moving furniture, or warehouse work to make ends meet. The picketing is taking place in front of a factory outside of Seattle, where Boeing produces its best-selling aircraft.
The second week of the Boeing workers’ work stoppage in the Pacific Northwest has just begun. The length of the Boeing strike will determine how much it costs the firm financially, but rating agencies have cautioned that if it goes on too long, Boeing may lose its rating.
That would increase the company’s borrowing expenses, which are currently $60 billion. Following an almost catastrophic door plug explosion from one of its 737 Max aircraft in January, Boeing has already spent about $8 billion this year.
Since 2018, Boeing has not produced a profit on a yearly basis. Kelly Ortberg, the company’s new CEO, is working to repair the company’s reputation following months of production problems that delayed customer deliveries and cost it money.
Machinists in Renton were getting ready for what may turn out to be a protracted strike at the local union office: Pallets of bottled water were brought in by union members, and in the kitchen, a massive tuna salad was prepared so that employees could have sandwiches. Union vans made their way to protest locations in the Renton area, providing picket duty workers with transportation to restroom breaks. Overnight pickets were cold; heat was provided by burn barrels.
Many employees expressed how much they loved their work but expressed concern about the high cost of living in the Seattle region, which is home to Boeing’s manufacturing facilities.
The Office of Financial Management in Washington state reports that as of 2023, the typical home price there was $613,000, up from $253,800 a decade earlier, a 142% rise. This surpasses the approximately 55% growth observed nationwide during that time frame, as per the Federal Reserve Bank of St. Louis’ data.
“We cannot afford [to buy] a house,” stated Boeing technician Jake Meyer. He added that he plans to drive for a food delivery business during the walkout and is considering taking up odd jobs like moving furniture. Meyer claimed that despite going on strike against Boeing to demand more money, he still loves his work as an aircraft builder.
He declared, “I’m proud of the work I do.”
Another Boeing worker claimed to have been saving for months by skipping out on things like dining out and making his three months’ worth of house payments early.
“I am capable of enduring for the duration required,” the employee, who remained anonymous, declared.
$50 million every day
By a vote of nearly 96% in favor of a strike, more than 30,000 Boeing machinists rejected a preliminary labor agreement and left their jobs at midnight on September 13. Their last paychecks arrived on Thursday, and their health insurance are scheduled to expire on September 30. Their $250 weekly payment will shortly come from a union strike fund.
Ron Epstein, an aerospace expert at Bank of America, believes that Boeing is losing around $50 million every day as a result of the strike. The majority of Boeing’s aircraft manufacturing was suspended by the strike, and the impact of this is being felt by the company’s extensive network of suppliers, some of whom have already been instructed to stop shipments. Boeing’s South Carolina nonunion facility continues to produce 787 Dreamliners.
The struggle is between a workforce demanding pay raises and other benefits and a faltering Boeing. Boeing’s latest proposal, which was approved by the machinists union, International Association of Machinists and Aerospace Workers District 751, featured a four-year contract with general salary increases of 25%.
Employees stated that they wanted yearly bonuses, a return of pensions that had been forfeited more than ten years ago, and salary increases that were more in line with the union’s 40% proposal.
While all parties were present at the negotiating table this week, neither party expressed satisfaction with the lack of advancement.
Union negotiators wrote to members on Wednesday, saying, “We continue to prioritize the issues you defined in the most recent survey, but we are deeply concerned that the company has not addressed your top concerns.” During today’s discussions, no significant progress was achieved.
After a hiring embargo and other cost-cutting measures were revealed this week, Ortberg, who has only been at Boeing for six weeks, stated this week that tens of thousands of employees, including managers and executives, will be placed on temporary furlough.
In a statement to staff on Friday, Ortberg stated, “During mediation with the union this week, we continued our good faith efforts to engage the union’s bargaining committee in meaningful negotiations to address the feedback we’ve heard from our team.”
Ortberg added, “We remain very committed to reaching an agreement as soon as possible that recognizes the hard work of our employees and ends the work stoppage in the Pacific Northwest, even though we are disappointed the discussions didn’t lead to more progress.”
The current labour dispute in recent years has involved actors, autoworkers, port workers, airline employees, and Boeing machinists in the Seattle region, Oregon, and a few other cities. All of these groups have earned rises following strikes or threats of strikes.
The union and Boeing have been urged to come to an agreement by the Biden administration.
Transportation Secretary Pete Buttigieg said on CNBC’s “Squawk Box” on Thursday, “I do believe that both parties want to get to a resolution here, and hoping to see one that makes sense for the workers and it works for a company that really needs to find its way forward on so many fronts.”
tight job market
Boeing is dealing with a manpower shortage. The firm was in better financial health and there was less competition for jobs in the area during the last strike, which took place in 2008 and lasted less than two months.
A supplier to Boeing said CNBC that because it takes so long to educate employees on such complex and specialized job, furloughing or terminating employees will result in issues for months to come.
Boeing and its suppliers lost hundreds of employees during the epidemic. Since then, they have had difficulty finding and training employees in time for the demand for aircraft and the rise in air traffic.
According to Epstein of Bank of America, “you’re in an environment where skilled, technical labor is hard to get right now, particularly in aerospace and defense.” “So what do you do to draw them in as well as keep them? Maybe it offers you an advantage over others who are attempting to draw in talent if they truly desire a pension.
