Boeing factory workers gather in a picket line on 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. – Bonded money Boeing is facing rising costs in the ongoing workers’ strike as workers demand higher wages. Failure to make a deal can be even more expensive.
In the shadows of a factory outside Seattle where Boeing makes its best-selling planes, Boeing pick-up workers told CNBC they have saved money and taken or are considering taking side jobs in landscaping, moving furniture or warehousing to make ends meet if the strike drags on.
The lockout of Boeing factory workers in the Pacific Northwest just entered its second week. The financial cost of the Boeing strike depends on how long it lasts, although ratings agencies have warned that the company could face a downturn if it drags on too long.
That would add to the company’s borrowing costs, which already have $60 billion in debt. Boeing has burned nearly $8 billion so far this year after a near-catastrophic door plug blowout on one of its 737 Max planes in January.
Boeing has not turned an annual profit since 2018, and its new CEO Kelly Ortberg is trying to restore the company’s reputation after months of manufacturing problems that have delayed deliveries to customers, draining cash.
Boeing 737 Max planes land at the airport in Renton, Washington.
Leslie Josephs CNBC
At the local union office in Renton, machinists were preparing for what could be a long strike: Union members carrying large pallets of bottled water, while someone mixed a large tuna salad in the kitchen to make sandwiches for the workers. Union vans toured showrooms around Renton providing transportation to private rest areas for workers on the job. The heated barrels provided heat for the cold night peaks.
Many workers said they love their jobs but worry about the high cost of living in the Seattle area, where most of Boeing’s planes are made.
The median home price in Washington state has increased nearly 142% to $613,000 by 2023, up from $253,800 a decade ago, according to the state Office of Financial Management. That’s more than a nearly 55% increase nationwide over the same period, according to data from the Federal Reserve Bank of St. Louis.
“We can’t afford it [to own] home,” said Jake Meyer, a Boeing mechanic who said he will start driving to provide food delivery during the strike and is looking at odd jobs like moving furniture. he likes the job of building airplanes.
“I’m proud of my work,” he said.
One Boeing engineer said he has been saving for months, giving up things like restaurants and paying off his mortgage three months early.
“I can stay for a long time,” said the employee who did not want to be identified.
$50 million a day
More than 30,000 Boeing machinists walked off the job at midnight on September 13 after rejecting a short-term labor agreement by a vote of nearly 95% – 96% voted to support the strike. They got their last paychecks Thursday, and health benefits will end Sept. 30. The union’s strike fund will soon pay them $250 a week.
The strike is costing Boeing about $50 million a day, according to Bank of America aerospace analyst Ron Epstein. The strike halted production of many Boeing planes, and that affected a large network of aircraft suppliers, some of which have already been told to halt shipments. Boeing still produces 787 Dreamliners at its non-union factory in South Carolina.
Members of the Boeing Machinists union count votes to accept or reject a proposed contract between Boeing and union leaders and whether or not to strike if the contract is rejected, at Aerospace Machinists Union Hall in Seattle, Washington, on September 12, 2024.
Jason Redmond | AFP | Getty Images
The battle pits struggling Boeing against workers seeking pay raises and other benefits. Boeing’s latest offer includes a 25% wage increase over the course of the four-year deal and was endorsed by the machinists’ union, the International Association of Machinists and Aerospace Workers District 751.
The workers said they are looking for a salary increase of close to 40% that the union has proposed as well as annual bonuses and the return of pensions that were lost more than ten years ago.
Boeing and the union have been at the negotiating table this week, but both Boeing and union negotiators said they were disappointed with the lack of progress.
“We continue to prioritize the issues you outlined in the latest survey,” union negotiating officials wrote to members Wednesday, “however we are deeply concerned that the company has not addressed your top concerns. No meaningful progress has been made during today’s negotiations.”
Ortberg, just six weeks on the job, announced the temporary layoffs this week of tens of thousands of Boeing workers, including executives and managers, after the freeze and other cost-cutting measures announced this week.
“During negotiations with the union this week, we continued our good faith efforts to engage with the union’s bargaining committee to address the feedback we heard from our team,” Ortberg said in a letter to employees Friday.
“While we are disappointed that the negotiations did not lead to more progress, we remain deeply committed to reaching an agreement as soon as possible that recognizes the hard work of our workers and ends the work stoppage in the Pacific Northwest,” Ortberg wrote.
The strike, which includes Boeing machinists in the Seattle, Oregon area and several other locations, is the latest in a series of labor battles in recent years involving actors, auto workers, dock workers and airline workers, all of whom have won. raises after strikes or threats of strikes.
The Biden administration encouraged Boeing and the union to reach an agreement.
“I believe both sides want to reach a resolution here, and I hope to see what is reasonable for the employees and for a company that really needs to find a way forward on many fronts,” Transportation Secretary Pete Buttigieg said. he told CNBC’s “Squawk Box” on Thursday.
Strong labor market
Boeing is facing a tough labor market. By the last strike, in 2008, which lasted less than two months, the company was in a better financial position, and there was less competition for jobs in the area.
One Boeing supplier told CNBC that laying off or laying off workers would cause problems for months because it takes a long time to train workers in this technical and detailed job.
During the strike, Boeing and its suppliers laid off thousands of workers. Since then they have struggled to hire and train workers in time to resume air travel and demand for aircraft.
“You’re in an area where it’s hard to find skilled, technical workers right now, especially in the aerospace and defense sectors,” Bank of America’s Epstein said. “So what do you do to not only retain them but attract them? If they really want a pension, maybe that gives you a competitive advantage over people trying to attract talent.”