Boeing factory workers gather on a picket line near the entrance to the production facility in Renton, Washington, USA, on September 13, 2024, on the first day of the strike.
Matt Mills McKnight | Reuters
RENTON, Wash. — Financial difficulties Boeing An ongoing mechanics strike as workers demand higher wages is driving up costs, and could lead to further increases if no deal is reached.
In the shadows of the suburban Seattle factory where Boeing makes its best-selling planes, picketing Boeing machinists told CNBC they were saving money and starting or thinking about starting side jobs such as landscaping, moving furniture and warehouse work to ensure they could make ends meet if the strike dragged on.
A strike by workers at Boeing’s Pacific Northwest factories has just entered its second week. The economic cost of the strike to Boeing will depend on how long it lasts, but ratings agencies have warned that a prolonged strike could result in a downgrade of the company’s ratings.
That would add to borrowing costs for a company already $60 billion in debt. Boeing has wasted about $8 billion since a door plug on a 737 Max jet blew open in January, leading to a devastating crash.
Boeing has not made an annual profit since 2018, and new CEO Kelly Ortberg is trying to restore the company’s reputation after a months-long manufacturing crisis that has left it struggling with delayed deliveries to customers and cash shortages.
A Boeing 737 MAX plane parked at an airport in Renton, Washington.
Leslie Josephs | CNBC
At the local union office in Renton, machinists prepared for a potentially lengthy strike. Union members brought in large pallets of bottled water, and someone mixed a giant tuna salad in the kitchen to make sandwiches for the workers. Union vans visited demonstrations around Renton to provide transportation for picketers to bathroom breaks. Fire barrels provided heat for picketers during the cold nights.
While many employees spoke of their love of their work, they also expressed concern about the high cost of living in the Seattle area, where most of Boeing’s planes are manufactured.
The median home price in Washington state is expected to rise about 142% to $613,000 by 2023, up from $253,800 a decade ago, according to the Washington State Department of Financial Management. That outpaces the national average of about 55% growth over the same period, according to data from the Federal Reserve Bank of St. Louis.
“We can’t afford it,” said Jake Meyer, a Boeing mechanic who said he was considering working as a driver for a food delivery service and doing odd jobs like moving furniture during the strike. Meyer is striking for higher wages from Boeing, but said he enjoys his job building planes.
“I take pride in my work,” he said.
Another Boeing machinist said he’s been saving for months, including giving up restaurant meals and paying his mortgage three months early.
“We can hold out as long as we need to,” said the worker, who spoke on condition of anonymity.
$50 million a day
More than 30,000 Boeing machinists rejected a tentative collective bargaining agreement by nearly 95 percent of workers, 96 percent of whom voted to strike, and went on strike at midnight on September 13. They received their last paycheck on Thursday, and their health benefits are set to end on September 30. The union’s strike fund will immediately provide them with $250 a week.
The strike is costing Boeing about $50 million a day, estimates Bank of America aerospace analyst Ron Epstein. The strike has halted production of most of Boeing’s planes, with ripple effects through the aerospace giant’s vast network of suppliers, some of which have already been told to halt deliveries. Boeing still makes the 787 Dreamliner at a nonunion factory in South Carolina.
Boeing Machinists union members count votes to approve or reject a proposed contract between Boeing and union leaders, and 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 fight pits the embattled company against workers seeking higher wages and other improvements. Boeing’s latest proposal includes a 25% prevailing wage increase over a four-year contract and has been endorsed by the machinists’ union, International Association of Machinists and Aerospace Workers Local 751.
Workers said they were looking for a wage increase of nearly 40 percent as proposed by the union, as well as an annual bonus and the restoration of pensions lost more than a decade ago.
Boeing and the union sat down at the negotiating table this week, but negotiators from both sides said they were disappointed with the lack of progress.
“We continue to prioritize the issues identified in the latest investigation,” union negotiators wrote to members on Wednesday, “but we are deeply concerned that the company has not addressed your greatest concerns. No meaningful progress was made in today’s discussions.”
Just six weeks into his role, Ortberg announced furloughs for tens of thousands of Boeing employees, including managers and executives, following a hiring freeze and other cost-cutting measures announced this week.
“During mediation with the union this week, we continued to engage in meaningful negotiations with the union’s bargaining committee and make good faith efforts to address the feedback we’ve heard from our team,” Ortberg said in a memo to staff on Friday.
“While we are disappointed that the talks did not lead to further progress, we acknowledge the hard work of our employees and remain committed to reaching an agreement that ends the strike in the Pacific Northwest as quickly as possible,” Ortberg wrote.
The strike, which also includes Boeing machinists in the Seattle area, Oregon and several other locations, is just the latest in a series of recent labor disputes that also include actors, autoworkers, dockworkers and airline employees who have won wage increases after strikes or threats of strikes.
The Biden administration is urging Boeing and the unions to reach an agreement.
“I believe both parties want to get this resolved, and I’m hopeful that we can find a solution that works for workers and that works for businesses, who have to find a way forward on many fronts,” Transportation Secretary Pete Buttigieg said Thursday on CNBC’s “Squawk Box.”
Tight labor market
Boeing faces a tough labor market: During the last strike, which lasted less than two months in 2008, the company was in good financial shape and had little competition for jobs in the area.
One Boeing supplier told CNBC that furloughing or laying off employees would cause problems for months to come because it takes so long to train staff on technical, detailed work.
Boeing and its suppliers laid off thousands of workers during the pandemic and have since struggled to hire and train workers in time for a recovery in air travel and demand for aircraft.
“We have a tough environment right now for skilled technical workers, especially in the aerospace and defense industry,” Bank of America’s Epstein said. “So how do we not just retain them, but attract them? If they really want a pension, that might give them a competitive advantage over people who are trying to attract talent.”
