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., Sept. 13, 2024.
Matt Mills McKnight | Reuters
RENTON, Wash. – Short on cash Boeing General Electric is facing rising costs due to an ongoing machinists’ strike as workers demand higher wages. Failure to reach an agreement could further increase costs.
At a factory outside Seattle where Boeing makes its best-selling planes, striking Boeing machinists told CNBC they have saved money and are taking or considering taking side jobs landscaping, moving furniture or working in warehouses to make ends meet if the strike continues much longer.
Boeing’s strike at its Pacific Northwest plant has just entered its second week. The financial cost of the strike depends on how long it lasts, though rating agencies have warned that the company could face a downgrade if it goes on too long.
That would add to the company’s borrowing costs, which already have $60 billion in debt. Boeing has spent about $8 billion so far this year in the wake of a 737 Max door seal explosion in January.
Boeing has not posted an annual profit since 2018, and its new CEO, Kelly Ortberg, is trying to restore the company’s reputation after months of manufacturing crises that slowed deliveries to customers, starving it of cash.
Boeing 737 Max aircraft sit at Renton Airport in Washington.
Leslie Josephs | CNBC
At the Renton local union office, machinists were preparing for what would become a long strike: Union members loaded large pallets of water bottles onto the floor, while someone in the kitchen mixed up a giant tuna salad to make sandwiches for workers. Union trucks toured protest sites throughout Renton to provide transportation to bathroom breaks for picketers. Burning barrels provided heat for picketers who stayed up all night in the bitter cold.
Many workers said they loved their jobs but were concerned about the high cost of living in the Seattle area, where most Boeing planes are manufactured.
The median home price in Washington state is set to rise about 142% to $613,000 by 2023, up from $253,800 a decade ago, according to the state’s Office of Financial Management. That’s more than the national increase of about 55% over that period, according to data from the Federal Reserve Bank of St. Louis.
“We can’t afford it” [to own] Jake Meyer, a Boeing mechanic, said he will start driving for a food delivery service during the strike and is looking to pick up odd jobs like moving furniture. Meyer said that although he is striking for higher pay from Boeing, he enjoys his job building airplanes.
“I’m proud of my work,” he said.
One Boeing machinist said he had been saving money for months, cutting out things like restaurants and paying off his mortgage three months early.
“I can go on as long as it takes,” said the worker, who spoke on condition of anonymity.
$50 million per day
More than 30,000 Boeing workers walked off the job at midnight on Sept. 13 after rejecting a temporary labor agreement by nearly 95 percent — 96 percent voted to strike. They received their last paychecks on Thursday, and health benefits are set to expire on Sept. 30. The union’s strike fund will soon give them $250 a week.
The strike is costing Boeing about $50 million a day, Bank of America analyst Ron Epstein estimates. The strike has halted production of most Boeing planes, affecting the aerospace giant’s vast network of suppliers, some of whom have already been asked to halt shipments. Boeing is still making 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 Sept. 12, 2024.
Jason Redmond | AFP | Getty Images
The battle is between a struggling Boeing company and a workforce seeking higher wages and other improvements. Boeing’s latest offer included a 25 percent overall wage increase over four years, and was supported by the United Machinists, the International Association of Machinists and Aviation Workers, District 751.
Workers said they were looking for wage increases close to the 40% proposed by the union, as well as annual bonuses and the restoration of pensions lost more than a decade ago.
Boeing and unions were at the negotiating table this week, but Boeing and union negotiators said they were disappointed with the lack of progress.
“We continue to prioritize the issues you identified in the latest survey, however we are deeply concerned that the company has not addressed your key concerns. No tangible progress was made during today’s talks,” union negotiators wrote to members on Wednesday.
Ortberg, who has been in office for just six weeks, announced, Boeing announced temporary layoffs this week for tens of thousands of its 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 our good-faith efforts to engage the union negotiating committee in meaningful negotiations to address the comments we heard from our team,” Ortberg said in a memo to employees on Friday.
“While we are disappointed that discussions did not lead to further progress, we remain deeply 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, involving Boeing machinists in the Seattle area, Oregon and a few other locations, is the latest in a series of labor battles in recent years that have included representatives, auto workers, dock workers and airline employees, all of whom have won pay increases after strikes or threats of strikes.
The Biden administration has encouraged Boeing and the unions to reach an agreement.
“I think both sides want to come to a resolution here, and I hope to see a resolution that makes sense for workers and works for a company that really needs to find its way forward on many fronts,” Transportation Secretary Pete Buttigieg told CNBC’s “Squawk Box” on Thursday.
Tight labor market
Boeing faces a tough labor market. During the last strike in 2008, which lasted less than two months, the company was in better financial shape, and competition for jobs in the region was less.
One Boeing supplier told CNBC that laying off or furloughing workers would cause problems for months to come because training employees for such technical and detailed work takes a long time.
During the pandemic, Boeing and its suppliers laid off thousands of workers. Since then, the company has struggled to hire and train workers in time to keep up with the recovery in air travel and demand for airplanes.
“You’re in an environment where skilled, technical workers are hard to come by right now, especially in aerospace and defense,” says Epstein of Bank of America. “So what do you do to retain and attract them? If they really want a pension, that might give you a competitive advantage over people who are trying to attract talent.”
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