Tick, tick, tick. With every second that passes, the cost to Boeing of the ongoing machinists’ strike rises by a few hundred dollars.
After a minute, the figure has grown to almost $35,000, swelling to $2.1 million every hour, and by the time 24 hours have elapsed, bang goes $50 million, according to estimates from JP Morgan. Some reports put the daily impact at twice that figure.
We may never know the exact sum, but what is clear is that Boeing – especially the crisis-riven 2024 version – cannot sustain losses of any great size for long.
The airframer has already switched to cash-conservation mode: postponing deliveries from suppliers, slashing all non-essential spending, and threatening temporary furloughs for staff.
Although these measures should buy it some time, they will not fully mitigate the impact of idled production lines, which ultimately mean no deliveries going out, and no revenue coming in.
Boeing – in this and in other matters such as supply chain outsourcing – is paying for failings of the past.
It last hammered out a pay deal with the machinists’ union in 2008 – an agreement that was extended in 2011 and again in 2014.
But that last set of negotiations still rankles members of the International Association of Machinists and Aerospace Workers (IAM), who felt boxed into a corner by Boeing’s threats to move production away from the Puget Sound region if they did not agree to its terms.
That is why union members viewed Boeing’s proposal – which included seemingly favourable terms such as 25% pay increases across four years, plus a commitment to build its next jet in Washington state – as unreasonable.
They feel the last decade has been one of stagnant wages, increased healthcare costs, and little or no job security. The new wage agreement, in their view, must make up lost ground.
Little surprise, then, that almost 95% of union members rejected the offer, despite the IAM leadership’s recommendation to accept it.
Boeing’s leadership has called on workers “not to sacrifice the opportunity to secure our future together because of the frustrations of the past”, but it seems to be badly misreading the room.
Negotiations have resumed, aided by the Federal Mediation and Conciliation Service. But the early signs were not encouraging: after a first day, the IAM expressed frustration that Boeing was unwilling and unprepared to move on the key issues of pay and pensions.
The question now is who will blink first? Neither side wants a protracted strike but the union senses that on this occasion, time – and Boeing’s financial state – is on its side.
Tick, tick, tick.
