It's been just over a month since more than 30,000 Boeing machinists left their jobs after voting overwhelmingly against a temporary contract. Since then, costs and tensions have increased.
Strikes increase pressure on Boeing's new CEO Kelly Ortberg, who was hired over the summer to deal with the plane maker's various problems. S&P Global Ratings estimates the strike is costing Boeing more than $1 billion a month, marking an already difficult year that began with a near-catastrophic strike. Max 737 Port Plug And six years later came the Max's first two fatal accidents that sent the flooring manufacturer into constant crisis mode.
The unions and the company remained at an impasse, and aircraft production was halted at factories in the Seattle area and elsewhere, depriving Boeing of money. Boeing last week made a sweet contract offer The union declined, saying the matter had not been discussed.
Boeing officials were encouraging airline customers to reach an agreement in the weeks leading up to the key vote, according to people familiar with the matter who spoke on condition of anonymity because the conversations were private.
But this optimism did not materialize, as on September 13 workers voted 95% against an initial temporary work agreement.
“They have to increase the supply. There’s no doubt about it,” said Harry Katz, a professor who studies collective bargaining at Cornell University’s School of Industrial and Labor Relations. He said a return to the pension plan, one of the union's demands, is unlikely, however, and estimated the strike could last another two to five weeks.
The process to end the strike became more complicated, with federal mediation talks breaking down mid-week.
Boeing said Thursday it filed an unfair labor practice complaint with the National Labor Relations Board, accusing the International Association of Machinists and the Aerospace Workers Union of negotiating in bad faith and misrepresenting the automakers' proposals.
On Friday night, John Holden, president of the striking union, IAM District 751, pushed for a return to negotiations.
“CEO Ortberg has an opportunity to do things differently, rather than threatening the same old, tired labor relations that are used to intimidate and crush anyone who supports them,” he said in a statement. “Ultimately, it will be our buy-in that will determine whether any proposed negotiated settlement will be accepted. They want a resolution that can be negotiated and that meets their needs.”
Boeing's union machinists are not receiving paychecks and lost their company-funded health insurance at the end of September. However, unlike the last Boeing factory strike in 2008, there are more contract jobs in the Seattle area to help workers fill vacancies. A union message board posts job opportunities such as driving for food delivery services and warehouse work.
Workforce reduction
After the stock market close on Friday, Ortberg said the company has plans to cut its global workforce by about 10% “in the coming months,” including layoffs of executives, managers and employees.
He also told employees that Boeing would stop production of the 767 commercial freighter when it filled its backlog in 2027, and that delivery of the 777X would be delayed another year, until 2026.
The surprise cut came alongside preliminary financial results that showed widening losses: Boeing said it expected to lose about $10 a share in the third quarter and would take about $5 billion in charges to its commercial and defense units. . The manufacturer hasn't turned an annual profit since 2018. Ortberg will face investors in his first full earnings call as CEO on Oct. 23.
“The thing is, once they get 737 production on track, all their financial problems go away, but they're not willing to settle for that,” said Richard Aboulafia, managing director of Aerodynamic Advisory. “They are laying off a lot of people who could make this (sustainable manufacturing) happen. It looks like they are burning down their own houses.”
Abulfia estimated that labor represented about 5% of the aircraft cost in the final assembly of an aircraft.
Ortberg is now tasked with raising money and stopping the bleeding as the company's losses mount. Boeing shares were down 42% this year through Friday's close, the biggest decline since 2008.
“Instead of spreading ourselves thin among our many ventures, we need to focus our resources on working and innovating within who we are,” Ortberg said in a note to employees Friday. .
S&P Global Ratings warned the company last week that it was at risk of being downgraded to junk status as the closure of the 737 Max, Boeing's best-selling model, and its 767 and 777 cost the company more than US$100. $1 billion per month. Included assumptions previously announced cut costs As well as the temporary furlough, the hiring freeze and most purchase orders for the affected aircraft are suspended.
Boeing “is facing quality, labor relations, program execution and cash burn issues that appear to have created an ongoing cycle of destruction,” Bank of America aerospace analyst Ron Epstein said in a note Friday. He said Boeing's preliminary financial statement on Friday pointed to a possible $15 billion capital raise in the works.
The announced job cuts come as Boeing and the rest of the aerospace supply chain work to hire and train new machinists and other specialists in the wake of the pandemic. Purchases and layoffs Thousands of employees.
Boeing's volatility could affect its suppliers. Boeing 737 fuselage maker, Spiritual Aerosystem, is considering laying off workers as part of its cost-cutting contingency plan, a spokesperson said, adding that it has not made any decision. Boeing is in the process of acquiring the company.
“They're probably telling us a story about the cost savings they're realizing,” Abulfia said of Boeing's latest cost cuts. “When things didn’t work out and stopped them from trying again?”
