Boeing factory workers gather on a picket line during the first day of a strike near the entrance to a production facility in Renton, Washington, US, September 13, 2024.
Matt Mills McKnight | Reuters
RENTON, Wash. – Cash-strapped Boeing faces rising costs from ongoing machine strikes as workers demand higher wages. Failure to complete a deal can be even more costly.
In the shadow of the factory outside Seattle where Boeing makes its best-selling planes, Boeing picketers told CNBC that they have saved money and are taking or considering taking side jobs in landscaping, moving furniture or warehouse work to make ends meet. the strike continued longer.
Work stoppages by Boeing plant workers in the Pacific Northwest entered just the second week. The financial cost of the attack on Boeing depends on how long it lasts, although rating agencies have warned that the company could face a downgrade if it drags on for too long.
That will increase the cost of the company’s debt, already $ 60 billion in debt. Boeing has burned about $8 billion so far this year because of a near-catastrophic door plug on one of its 737 Max planes in January.
Boeing hasn’t posted an annual profit since 2018, and new CEO Kelly Ortberg is trying to restore the company’s reputation after months of a manufacturing crisis that has slowed deliveries to customers, draining cash.
A Boeing 737 Max plane sits at the airport in Renton, Washington.
Leslie Josephs CNBC
At the local union office in Renton, machinists are preparing for what could be a long strike: Union members carry bottled water on large pallets, while others mix a giant tuna salad in the kitchen to make sandwiches for the workers. Union vans visit demonstration sites around Renton offering transportation to bathrooms for workers on picket duty. Burnt barrels provided heat for the chilly overnight pickets.
Many workers say they love their jobs, but worry about the high cost of living in the Seattle area, where the majority of Boeing planes are made.
The median home price in Washington state is set to rise about 142% to $613,000 in 2023, from $253,800 a decade earlier, according to the state Office of Financial Management. That exceeds the approximately 55% increase nationally during this period, according to data from the Federal Reserve Bank of St.
“We can’t (own) a house,” said Jake Meyer, a Boeing mechanic who said he would start driving for a food delivery service during the strike and find odd jobs such as moving furniture. Meyer said that even though he was getting a higher salary from Boeing, he enjoyed working on airplanes.
“I’m proud of my work,” he said.
Another Boeing engineer said he had been saving for months, giving up on things such as restaurants and paying his mortgage three months early.
“I can last as long as I can,” said the worker, who spoke on condition of anonymity.
$50 million a day
More than 30,000 Boeing machinists walked off the job at midnight on September 13 after rejecting a tentative labor deal in nearly 95% of the vote – 96% voted to strike. They received their paychecks last Friday, and health benefits are set to end on September 30. A strike fund from the union will soon provide $250 per week.
The attack cost Boeing about $50 million a day, according to estimates by Bank of America aerospace analyst Ron Epstein. The strike halted production of most Boeing planes, and it spread to the aerospace giant’s supplier network, some of which have been ordered to halt shipments. Boeing still builds 787 Dreamliners at a non-union plant in South Carolina.
Members of the Boeing Machinists union vote to accept or reject a proposed contract between Boeing and union leaders and whether or not to strike if the contract is rejected, at the Aerospace Machinists Union Hall in Seattle, Washington, on September 12, 2024.
Jason Redmond AFP Getty Images
The battle pitted Boeing against struggling workers seeking wage increases and other improvements. Boeing’s latest offer includes a 25% general wage increase over a four-year deal and was endorsed by the machinists’ union, the International Association of Machinists and the Aerospace Workers District 751.
Workers say they are seeking pay increases closer to the 40% proposed by the union as well as annual bonuses and the restoration of pensions lost more than a decade ago.
Boeing and the union were at the negotiating table this week, but both Boeing and union negotiators said they were disappointed by the lack of progress.
“We continue to prioritize the problems identified in the latest survey,” union negotiators wrote to members Wednesday, “but we are primarily concerned that the company has not addressed your main problem.
Ortberg, who has been on the job for just six weeks, announced temporary furloughs this week for tens of thousands of Boeing staff, including managers and executives, because of the hiring freeze and other cost-cutting measures announced this week.
“During mediation with the union this week, we continue our good faith efforts to engage the union bargaining committee in meaningful negotiations to address the feedback we have heard from our team,” Ortberg said in a memo to staff Friday.
“While we are disappointed that the discussion did not lead to further progress, we remain very committed to reaching an agreement as soon as possible that recognizes the hard work of our employees and ends the stoppage of work in the Pacific Northwest,” wrote Ortberg.
The strike, which includes Boeing engines in the Seattle, Oregon area and several other locations, is just the latest in a series of labor battles in recent years that have included actors, auto workers, dock workers and airline employees, all of whom have won. increases after an attack or threat of an attack.
The Biden administration is encouraging Boeing and its unions to reach a deal.
“I believe that both parties want to make a resolution here, and hopefully we can see that it works for the workers and works for the companies that really need to move forward on a number of fronts,” Transportation Secretary Pete Buttigieg told CNBC’s “Squawk Box” on Friday. .
Tight labor market
Boeing faces a tight labor market. During the last strike, in 2008, which lasted less than two months, the company was in better financial shape, and there was less job competition in the area.
One Boeing supplier told CNBC that furloughing or layoffs would cause problems for months because it takes so long to train staff in such technical and detailed work.
During the pandemic, Boeing and its suppliers laid off thousands of workers. They began struggling to hire and train workers in time for the revival of air travel and demand for aircraft.
“You’re in an environment where skilled, technical labor is hard to come by right now, especially in aerospace and defense,” said Bank of America’s Epstein. “So what do you do to not only retain them but attract them? If they really want to retire, maybe that gives them a competitive advantage over people trying to attract talent.”