Opinion: Boeing Workers Can Ask For More, And They’ll Get It
Boeing labor groups remain on strike despite an offer for a 35% raise. But they can hold out for more and they will get it.
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Boeing Machinists Reject Contract, Continue Strike
Boeing’s woes continued this week with its machinists labor union rejecting the manufacturer’s 35% pay increase over four years.
“The International Association of Machinists and Aerospace Workers announced Wednesday night that 64% of its Boeing members voted to reject the company’s latest contract offer and remain on strike. The offer included a 35% increase in wage rates over four years for 33,000 striking machinists but no restoration of pension benefits.” – Associated Press
The six-week strike could extend for weeks as labor demands the return of its pensions. Boeing was already on its back foot following a delay that’s lasted years for the 737-10 MAX aircraft, a nearly decade long delay on the 777-8/9 stretch updated versions, and limited 737 deliveries amid quality concerns following the Alaska Airlines emergency exit incident.
The space division has also stranded two astronauts at the International Space Station due to reliability issues of its crew delivery rocket system, already years late and billions over budget.
Labor Holds All The Leverage
Union leaders know that striking workers can stay on the picket lines even longer. The latest Boeing union strike vote was less overwhelming but still emphatic at nearly 2/3rds of union members declining the Aerospace giant’s offer. But Boeing factory workers hold all the cards.
The Boeing strike causing the company to hemorrhage $50MM/day and this is on top of its other existing delivery struggles which include scrutiny and a delivery pause of the 737 MAX line. The company is in the process of acquiring Spirit Aerosystems, and a failure to deliver sold aircraft further impacts cashflow.
The strength of labor resistance is considerable. The manufacturer has announced the loss of 17,000 jobs, set a termination of its 767 freighter aircraft program and announced a further delay of its revised 777 models until 2026. The fight for a return to a traditional pension goes on as CEO, Kelly Ortberg, has been unwilling to include it in its contract proposals. To vote against a return to work despite fairly large pay increases and in the face of job insecurity demonstrates the group’s determination.
The company is raising money from investors at the moment. That money only gets more expensive as the company continues to languish, shrink, and push deliveries. The labor strike, a diminished stock price, merger, and regulatory pressure all contribute to make the labor position as strong as possible.
The Real Reason Labor Can Ask For More, And Get It
Boeing would not be able to replace its workforce if needed, there aren’t enough skilled workers to fill the roles especially not in the Pacific Northwest. But that’s not nearly as powerful as the macro-level concerns. The US is inside the final two weeks of a neck-and-neck presidential election and the executive branch would benefit from a resolution; the missing 44,000 jobs excluded from the employment numbers doesn’t help.
The reason why labor can ask for even more – and they will get it – is because the US is highly dependent on Boeing for exports. In 2023, Boeing was the largest single net exporter in the US with $22bn; the US trails only China in exports by a relatively narrow 10% margin.
Boeing is too big to fail. And because it is too big to fail, and too important to the US economy on a number of fronts, it will find the money to get bailed out no matter what. Therefore, labor would be stupid not to ask for more, stick to its guns, and push even harder. The longer the strike goes, the stronger their position and we know they cannot be replaced and Boeing will find the money – even if the government has to step in – at some point.
Conclusion
The Boeing strike could end right now. Workers voting down the new contract would likely change their tune with a return of their traditional pensions. Much like American Airlines couldn’t afford to pay more for flight attendants and also couldn’t afford not to, Boeing is in the same position but on an extreme scale. Politicians are likely to weigh in, and financiers will apply more pressure. Is a 35% raise significant enough? I would think that even over four years that would keep up with the reported inflation rates (a flawed metric to be sure.) But it seems that Boeing machinists are pushing for something far costlier and long term. Will it work? Yes, it will.
What do you think?