Boeing is grappling with a series of ongoing issues, and now faces the looming threat of a significant strike by 32,000 workers. The new CEO, Kelly Ortberg, who started on August 8, finds himself in a precarious situation as he tries to navigate this potential crisis.
Union Demands and Negotiation Deadlines
The International Association of Machinists (IAM), representing around 33,000 Boeing employees in the Seattle area—nearly a quarter of the company’s workforce—has voted overwhelmingly to authorize a strike. Negotiations between the IAM and Boeing have been ongoing since August 12, with a critical deadline of September 12 to finalize a new contract.
The current contract, which dates back to 2008 and was renewed in 2014, is set to expire soon. The IAM is pushing for a 40% wage increase over the next three years, better medical cost sharing, improved retirement benefits, and a commitment to build Boeing’s next aircraft in Seattle.
Cost Implications and Production Risks
Meeting the union’s demands could cost Boeing more than $1.5 billion annually. However, some argue that these costs could be offset by increased productivity. Boeing aims to ramp up its production of the 737 to 38 planes per month but has been averaging between 20 and 25 planes this year. A prolonged strike could severely disrupt production rates and supply chains, potentially delaying Boeing’s recovery for years.
“We’re far apart on all the main issues—wages, health care, retirement, time off,” said Jon Holden, president of IAM District 751. “It’s been a tough slog to get through.”
Ongoing Challenges for Boeing
A potential strike adds to Boeing’s long list of recent troubles. The company has been plagued by fatal crashes due to design flaws, accusations of prioritizing profits over safety, dwindling aircraft sales, and significant financial losses. Additionally, Boeing has faced a guilty plea for misleading regulators and is dealing with mounting debt.
Both Boeing and the IAM have expressed a desire to avoid a strike, but tensions over past concessions and ongoing difficulties at Boeing make a swift resolution challenging.
Seeking a Fair Agreement
“We continue to bargain in good faith, focusing on what matters to our employees and their families,” Boeing stated. “We’re confident we can reach a deal that balances our employees’ needs with the company’s realities.”
Holden insists that any new deal must address previous concessions the union made, including higher health insurance costs and the loss of traditional pension plans. These concessions were made to prevent Boeing from moving jobs to nonunion plants, a move that was eventually avoided through these agreements.
New Leadership and Negotiation Dynamics
Kelly Ortberg, who has recently taken over as CEO, aims to mend the relationship with the IAM. Despite his efforts to reset relations, Holden has seen little change in Boeing’s negotiating stance. Former CEO Dave Calhoun also emphasized avoiding a strike, suggesting Boeing might be willing to offer competitive wages to prevent disruptions.
Boeing argues that IAM members have received a 60% wage increase over the past decade, thanks to general raises and incentives. However, the union remains unhappy with earlier concessions and seeks better job security and additional time off to avoid the risk of job outsourcing to nonunion facilities.
Historical Context and Future Outlook
The IAM has a history of striking Boeing, with four strikes since 1989, each lasting one to two months. The current situation is different, with recent union victories in other industries and acute labor shortages in aerospace post-pandemic. The IAM also seeks a seat on Boeing’s board of directors, which has been criticized for its handling of company issues.
As negotiations progress, the next few weeks are crucial. A brief strike might not cause severe disruptions, but a prolonged one could significantly impact Boeing’s operations and its broader supply chain. The outcome of these negotiations will be vital for Boeing’s ability to compete with Airbus and recover from its recent financial difficulties.
