Workers who assemble Boeing planes are on strike. Will that affect flights?
NEW YORK — NEW YORK (AP) — A strike by some 33,000 Boeing machinists has halted production of the U.S. aerospace giant’s best-selling planes. The workers began protesting Friday at Boeing plants and factories in Washington, Oregon and California after reject a contract offer their union negotiated and supported.
The work stoppage will not immediately affect commercial flights, but could still cause significant losses for the company, which is headquartered in Arlington, Virginia, but has roots in the Seattle area, where it produces most of its airline planes. Boeing is already struggling with a bad reputation and financial problems that have piled up in recent years.
Below you can read what you need to know about the possible consequences of the strike and what could happen next.
The strike will not affect travelers unless it lasts a very long time.
The strike brings production to a standstill the 737 MaxBoeing’s best-selling passenger plane, along with the 777 or “triple-seven” jet and the 767 freighter, are built at factories in Renton and Everett, Washington, near Seattle. It is unlikely to affect Boeing’s 787 Dreamliners, which are built by non-union workers in South Carolina.
Airlines sometimes place orders for large numbers of planes, but when they do, deliveries are usually spread out over several years. The strike is therefore unlikely to result in a shortage of planes for any particular airline. Some airlines may have to keep some of their older planes flying longer because the Boeing jets they bought to replace them are delayed.
Boeing, however, stands to lose a lot of money, at least in the short term. Based on the length of past strikes at Boeing — the last two were in 1995 and 2008 — TD Cowen aerospace analyst Cai von Rumohr says it’s realistic to think the current strike could last until mid-November, when the $150 weekly payments from the union’s strike fund seem low for the holidays.
A strike that long would cost Boeing up to $3.5 billion in cash flow, since the company gets about 60 percent of the sales price when it delivers a plane to a buyer, von Rumohr added. The eight-week strike in 2008 cost the company about $100 million a day in deferred revenue.
They are skilled workers that Boeing cannot simply replace.
“Boeing has to keep making these (planes) because Boeing is losing money because of their safety problems,” said Art Wheaton, director of labor studies at Cornell University’s School of Industrial and Labor Relations. “And safety problems are often caused by understaffing.”
Wheaton said that the striking members of the International Association of Machinists and Aerospace Workers had legitimate concerns about the rejected contract, which would have raised wages by 25 percent over four years, well below the union’s initial demand of 40 percent over three years.
“They haven’t had a raise in 10 years — they’re trying to make up for lost time,” Wheaton said. He pointed to the broader backdrop of inflation and rising costs of living. “There was a lot of bad blood” from other concessions workers were forced to make in their last deal, he added.
The union initially wanted to restore traditional pensions that were abolished a decade ago. The demand was a major stumbling block in early contract negotiations, but the union instead agreed to an increase in contributions to employees’ 401(k) retirement accounts and a promise that Boeing would build its next new plane in Washington.
AJ Jones, a quality inspector who has worked at Boeing for 10 years, said the wage increases and other terms of the proposed contract were insufficient.
“I’m glad we passed a vote to strike, because we are the leaders in the aerospace industry. And I think we deserve better,” Jones said Friday as he blew a whistle and held up a picket sign on a corner outside Boeing’s Renton campus. “We’re fighting for a fair wage, because you know, you have the Boeing bosses who are making millions in bonuses. And we want a fair wage.”
Boeing has indicated it is ready to return to the negotiating table.
“The message was clear that the preliminary agreement we reached with IAM leadership was not acceptable to members,” the company said in a statement, adding that it was “committed to resetting our relationship with our employees and the union.”
Chief Financial Officer Brian West said Friday that CEO Kelly Ortberg, who only became Boeing CEO on Aug. 8, was already working on ways to address union members’ concerns.
Experts say it depends on how much Boeing is willing to open its wallet. Bank of America analyst Ronald Epstein said Friday that Boeing will have to come closer to the union’s original proposal of a 40% wage increase and possibly make other concessions.
Boeing has more at stake than just its finances. Wheaton said Boeing doesn’t want to another dent in his reputation.
Very little has gone right for Boeing this year, from a panel that blows out and leaving a gaping hole in one of his passenger planes during an Alaska Airlines flight in January to NASA leaving two astronauts in space Instead, they are sent home in a Boeing spaceship full of problems.
The strike could also push the company, which has lost more than $25 billion over the past six years, even further behind European rival Airbus in orders and deliveries of new jet aircraft.
“They don’t really need this war if they can avoid it,” Wheaton said.
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Koenig reported from Dallas. Manuel Valdes contributed from Renton, Washington.