Boeing factory workers gather on a picket line during the first day of a strike near the entrance to a production facility in Renton, Washington, U.S., September 13, 2024.
Matt Mills McKnight | Reuters
RENTON, Wash. — Postal Boeing faces rising costs from an ongoing motorists’ strike as workers push for higher pay. Failure to complete a deal could be even more expensive.
In the shadow of a factory outside Seattle where Boeing builds its best-selling planes, Boeing engineers told CNBC they have saved money and have taken or are considering taking on side jobs in landscaping, moving furniture or labor warehouse to make ends meet if the strike continues for much longer.
A walkout by workers at a Boeing plant in the Pacific Northwest just entered its second week. The financial cost of the strike at Boeing depends on how long it lasts, although rating agencies have warned the company could face a downgrade if it lasts too long.
That would add to the company’s borrowing costs, already $60 billion in debt. Boeing has burned about $8 billion so far this year in the wake of a near-catastrophic door plug explosion from one of its 737 Max planes in January.
Boeing has not posted an annual profit since 2018, and its new chief executive Kelly Ortberg is trying to restore the company’s reputation after months of production crises that have slowed deliveries to customers and starved it of cash.
Boeing 737 Max planes sit at the airport in Renton, Washington.
Leslie Josephs | CNBC
At the local union office in Renton, machinists were preparing for a long strike: Union members were carrying large pallets of bottled water, while someone was mixing a huge tuna salad in the kitchen to make sandwiches for the workers. Union trucks visited demonstration sites around Renton offering transportation to bathroom breaks for on-call workers. Burning barrels provided heat for cold bunks during the night.
Many workers spoke of loving their jobs but worried 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 risen about 142 percent to $613,000 by 2023, from $253,800 a decade earlier, according to the state’s Office of Economic Management. That outstrips an increase of about 55 percent nationally during that period, according to data from the Federal Reserve Bank of St.
“We can’t afford it [to own] a house,” said Jake Meyer, a Boeing engineer who said he will start driving for a food delivery service during the strike and is looking to pick up odd jobs like moving furniture. He enjoys the job of building airplanes.
“I’m proud of my work,” he said.
Another Boeing engineer said he had been saving for months, forgoing things like restaurants and paying three months’ worth of mortgage payments early.
“I can take as long as it takes,” said the worker, who spoke on condition of anonymity.
50 million dollars a day
More than 30,000 Boeing engineers walked off the job at midnight on September 13 after rejecting a tentative labor agreement by a nearly 95% vote — 96% voting in favor of the strike. They received their last paychecks Thursday and health benefits are set to expire on September 30. A strike fund from the union will soon give them $250 a week.
The strike is costing Boeing about $50 million a day, Bank of America aerospace analyst Ron Epstein estimates. The strike has halted production of most of Boeing’s planes and is rippling through the aerospace giant’s vast network of suppliers, some of whom have already been told to halt shipments. Boeing still builds 787 Dreamliners at its non-union plant 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 the Aerospace Machinists Union Hall in Seattle, Washington, on September 12 2024.
Jason Redmond | AFP | Getty Images
The battle pits an embattled Boeing with a workforce seeking wage increases and other improvements. Boeing’s most recent offer included across-the-board wage increases of 25 percent in a four-year deal and was endorsed by the machinists’ union, the International Union of Machinists and Aerospace Workers 751.
The workers said they were seeking wage increases close to the 40 percent the union had proposed, as well as annual bonuses and restoration of pensions lost more than a decade ago.
Boeing and the union have been at the bargaining table this week, but both Boeing and union negotiators said they were frustrated by the lack of progress.
“We continue to prioritize the issues you identified in the most recent survey,” union negotiators wrote to members Wednesday, “but we are deeply concerned that the company has not addressed your primary concerns. No substantial progress has been made in today’s talks.”
Ortberg, who has been on the job for just six weeks, announced Temporary layoffs this week of tens of thousands of Boeing staff, including managers and executives, following a hiring freeze and other cost-cutting measures announced this week.
“In mediation with the union this week, we continued our good faith efforts to engage the union bargaining committee in meaningful negotiations to address the feedback we heard from our group,” Ortberg said in a memo to staff Friday. .
“While we are disappointed that the discussions did not lead to more progress, we remain very committed to reaching an agreement as soon as possible that recognizes the hard work of our employees and ends the work stoppage in the Pacific Northwest,” Ortberg wrote.
The strike, which involves Boeing engineers in the Seattle, Oregon area and a few other locations, is just the latest in a series of labor battles in recent years involving actors, auto workers, longshoremen and airline employees, who have win. increases after strikes or threats of strikes.
The Biden administration encouraged Boeing and the union to reach an agreement.
“I think both parties want to reach a resolution here, and I hope they see a resolution that makes sense for employees and works for a company that really has to find its way forward on so many fronts.” , Transportation Secretary Pete Buttigieg told CNBC’s “Squawk Box” on Thursday.
Tight labor market
Boeing faces a tight labor market. During the last strike, in 2008, which lasted less than two months, the company was in better financial shape and there was less competition for work in the area.
A Boeing supplier told CNBC that laying off or laying off workers would cause problems for months afterward because it takes so much time to train staff in such technical and detailed work.
During the pandemic, Boeing and its suppliers laid off thousands of workers. Since then, they have struggled to hire and train workers in time for a resurgence in air travel and aircraft demand.
“You’re in an environment where it’s difficult to get skilled, technical labor right now, particularly in aerospace and defense,” 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.”
