More than 30,000 Boeing factory workers walked off the job Friday , Sept. 13, after overwhelmingly rejecting a tentative agreement between Boeing and the union. A high 96% of Pacific Northwest workers from the International Association of Machinists and Aerospace workers voted in favor of the strike.
"I'm ready. I've been preparing for this for a while. I honestly don't think we're going to be out that long," Jacqueline Vaden said. "It's not a win-win for nobody when you go out on strike, but you got to do what you got to do."
Picketers said they were confident they wouldn’t be on strike too long given the pressure put on by the sheer number of workers involved. Investment banking company TD Cowen said a 50-day strike could cost Boeing an estimated $3 billion to $3.5 billion of cash flow.
Workers rejected a deal on the table that would have given 25% raises over four years. The union had pushed for 40% raises.
Boeing’s last strike was in 2008. It lasted for eight weeks and cost the company $100 million per day in deferred revenue.
Straight Arrow News interviewed AeroDynamic Advisory Managing Director Richard Aboulafia about the Boeing strike, what the company has to lose and why there is so much "bad blood" between the union and the company . He also gives his prediction on how long the strike will last.
The following has been edited for length and clarity. Watch the full interview in the video above.
Simone Del Rosario: It is never a good time to lose 33,000 workers, but why is this moment particularly bad timing for Boeing?
Richard Aboulafia: Well, there's good and bad news, really. The bad first, per your question. They are way behind in aircraft deliveries and losing market share fast to Airbus. And a lot of their customers are deeply aggrieved, understandably, by this. And of course, there are doubts about their core product line in terms of, shall we say, the reliability of the manufacturing process. So to have a strike come on top of all of this is not good.
Now the positive news is that for the first time in several decades, they actually have a CEO who understands the industry and I think can behave appropriately.
Simone Del Rosario: Okay, so you're bullish on Kelly Ortberg, but how does this look for him? He's been on the job for just a few weeks now and couldn't make a deal work with the union.
Richard Aboulafia: But remember he did get a deal with union management. I think both union management and Boeing management were a bit blindsided by the perhaps understandable anger that had built up in the workforce after several decades of maltreatment. But now hopefully they can work together to understand what needs to be done to get the workers happy and back to work.
So I tend to be pretty optimistic. That last strike you mentioned, the CEO at the time, Jim McNerney, his ambition was to break the back of labor. He never saw the value of cooperation. He was interviewed or heard on a live mic saying the workers will still be cowering or something vaguely amateurish and kind of childish like that.
Kelly Ortberg is the exact opposite. So I think this is going to be handled a lot faster.
Simone Del Rosario: Boeing had told employees earlier this week that they didn't hold anything back with this offer that was on the table, saying they put it all out there. In fact, reports earlier this week said that they thought they would be able to avoid a strike. What happened between then and now, with 96% voting to go on strike?
Richard Aboulafia: Yeah, a bit of a disconnect there, that's for sure. Clearly, everyone involved perhaps underestimated the level of grievance that had been built up and a determination to show that they did in fact hold the cards this time.
But the very fact that Boeing management issued a statement saying, 'We're going to go right back to the negotiating table,' means that maybe they didn't have everything. Obviously, they're talking again.
Simone Del Rosario: Let's dig into some of that disgruntled attitude. The union said that there was "discriminatory conduct, coercive questioning, unlawful surveillance, and we had unlawful promise of benefits." These are really strong words against Boeing. What's the culture been like? This predates the Kelly Ortberg era but certainly there's a lot of space between the union and the company here.
Richard Aboulafia: Yeah, and just a lot of bad blood under the bridge, to mix metaphors. You had a couple of decades of management by people who frankly weren't aerospace people for the most part. They were one-size-fits-all, when-in-doubt, cut-costs people. They were from the Jack Welch General Electric School of Management. They knew the cost of everything and the value of nothing. The results, well, they speak for themselves, a lot of ill will and a culture that's gone badly wrong.
Even if half of these accusations are correct, that's really bad. So I understand completely where the workers are coming from, but hopefully they also realize that Kelly Ortberg has only had a couple of weeks on the job to try to change the culture and it's a long road ahead toward getting it back. And hopefully they can find accommodation on what matters most, probably wages, and getting back some of their lost ground.
Simone Del Rosario: How do you think this strike is going to most affect the company in the immediate term?
Richard Aboulafia: Well, in the immediate term, it kind of reminds me of the Spirit AeroSystem strike that we saw back in June 2023. Everyone was shocked and prepared for the worst and Spirit is the producer of the entire body of Boeing's mainstay product, the 737. It lasted three days. Basically, you had a person at the helm, Tom Gentile at Spirit, who said, look, this is the fact of life and I've got some damage to repair. And it was good in three days.
To this day, I have to remind people of this happening because no one cares anymore, right? I'm kind of hoping it's a return to that, but no guarantees.
Simone Del Rosario: What about some of the highlights to the deal? What did you think were some of the highlights of the agreement that didn't get ratified but was out there like building a new plane in Seattle?
Richard Aboulafia: There are a couple of things that I think were positive. There was a request for a return to a structured pension. It wasn't in the cards, but they had a pretty generous 401k increase. There was a [promise of] if we launch a new product in the next four years of the contract, we will build it in Puget Sound. That was good for some, maybe other people said, well, what if they don't launch it in four years?
I think, however, the elimination of the bonus and the fact that they didn't reach the headline numbers that other people have reached with their unions in the aerospace industry, the 40% range, was probably the big standout for most people.
The post Boeing’s ‘bad blood’ with union workers led to first strike in 16 years appeared first on Straight Arrow News .
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