(Bloomberg) — At Boeing Co.’s sprawling aircraft manufacturing facility in Seattle, the great belt-tightening has begun as the planemaker and its factory workers brace for a labor dispute that will test the resolve of both sides.
Most read on Bloomberg
Striking employees received their last paycheck from Boeing on Thursday, and the company stopped paying their health insurance on Sept. 30. Both measures will hit household finances, which typically increases the pressure and risks for union negotiators in contract talks to reach a deal.
But as workers battle the embattled manufacturer for better wages and benefits, the 33,000 members of IAM District 751 enjoy a tight labor market and gig economy that allows them to quickly transition into low-skill jobs that help make ends meet. That gives the union a bargaining advantage, potentially thwarting Boeing’s effort to quickly end a dispute that is costing it about $100 million each day.
While the battle between one of the world’s largest exporters and its blue-collar workers may seem like an uneven fight at first glance, Boeing finds itself in an increasingly unsustainable situation with its finances so desperate that it cannot afford a prolonged standstill.
“I think everyone is prepared for the long haul,” said Christopher Dahl, 38, who has worked at Boeing for 10 years and is now testing flight control systems. “I’ve been through all the strikes because my parents were Boeing employees, so I know the game. And before, there weren’t the options we have to make extra money.”
Sixteen years ago, when Boeing’s largest union last struck, halting commercial airplane manufacturing for two months, companies like food delivery provider DoorDash Inc. and Uber Technologies Inc. didn’t exist. Now, those companies, along with a still-tough labor market, offer potential options for sustaining the strike.
Workers are once again digging in to avoid striking after defying union leadership by voting overwhelmingly against a 25% wage increase. On the picket lines outside the Renton factory where Boeing builds the 737 Max jets, employees said they have been saving for years to strike for as long as necessary — without pay other than $250 weekly IAM union deposits.
They are pushing for pay increases closer to the 40% that IAM District 751 leaders had initially requested, along with annual bonuses that Boeing’s offer eliminates. Some are even insisting that the planemaker restore their pensions.
With Washington’s unemployment rate at 4.9%, it’s easy to find temporary work in construction or driving for Amazon.com Inc. Across the street from Boeing’s gate, where union members were grilling hot dogs and waving at cars honking in support, Topgolf Callaway Brands Corp. prominently displayed a sign that read “Now Hiring.”
“There are so many jobs everywhere,” said Luis Arteaga, 54, who has been with Boeing for 18 years. “Red Robin is hiring, LA Fitness, every restaurant is hiring, FedEx, UPS — I mean, every place is hiring.”
Arteaga said he began planning his finances for this strike at least two years ago, and that he could easily go up to three months without a regular paycheck from Boeing, especially if he gets a side job.
Others who took part in the 24-hour picket line estimated that they could hold out until Christmas. Carmen Kim, who was on strike with her husband (like her, a Boeing employee), is prepared to survive for a whole year without regular work.
Meanwhile, Boeing is implementing a wide-ranging set of cost cuts to conserve cash. Austerity measures include unpaid furloughs for tens of thousands of American workers and a travel curtailment that forces top executives to travel in economy-class seats. The planemaker is even considering selling stock to supplement its rapidly depleting cash and maintain its investment-grade credit rating.
“We remain committed to resetting our relationship with our represented employees and continuing discussions with the union to reach a new agreement that is good for all of our teammates and our company as quickly as possible,” Kelly Ortberg, Boeing’s new chief executive, told employees in a memo.
The labor unrest at Boeing is notable for themes that resonate at other U.S. companies: lost pensions and frustration over stagnant wages that have not kept pace with inflation, said Brian Bryant, international president of the International Association of Machinists and Aerospace Workers.
“The entire labor movement is watching this closely,” Bryant said in an interview. “This is not just a Boeing issue. Workers in this country have been left behind. There is a movement here. Workers have said enough.”
The Biden administration has also been monitoring the strike, said Bryant, whose union represents nearly 700,000 members across North America.
“They have been in touch to see what the situation is, what support they can provide, anything they can do to bring the parties back together,” he added.
Many machinists interviewed by Bloomberg News cited a strong sense of injustice over what they perceived as union-busting tactics following the 2008 strike. Among them, Boeing started a second assembly line for the 787 Dreamliner in South Carolina, eroding its manufacturing base in Seattle.
“While new CEO Kelly Ortberg has taken a more conciliatory approach, there is 16 years of history working against him,” said Rob Stallard, an analyst at Vertical Research Partners, adding that “the gap between what IAM union members want and what Boeing is currently offering is large.”
A controversial 2014 contract extension looms as one of the most significant. IAM members were pressured to sign a long-term agreement that froze their pensions, raised health care premiums and provided modest wage increases in order to keep manufacturing of the 777X aircraft in the Seattle area. That agreement expired Sept. 12.
“For 10 years, the union had no room to maneuver and lost all influence,” said Leon Grunberg, professor emeritus of sociology at the University of Puget Sound. “That may be contributing to the sense of revenge or retribution.”
Boeing cannot resort to the same strategy in these negotiations. It has no new jet development program underway after five years of heavy financial losses. Nor can it shift more production to the southeastern United States, as unemployment remains near historic lows there.
In fact, striking Boeing workers say they are receiving many online job ads from Airbus SE, the company’s European rival, along with rocket maker Blue Origin LLC. Both have manufacturing plants in Alabama, where unemployment stood at 2.8% in July.
Bruce McFarland, a Boeing instrumentation technician and IAM official, pointed to another change that has transformed the union from past strikes: the spread of social media accounts that allow union members to stay connected and maintain high morale during what could be months without work.
While it’s early days, many of his colleagues are motivated by an idealistic goal as well as economic concerns, he said. They want a fair contract, but they also want to rebuild Boeing’s culture so that workers are treated with dignity.
“I love my job, I love the work I do,” McFarland said. “Sometimes you wonder what the company is doing.”
–With assistance from Eric Johnson.
Most read from Bloomberg Businessweek
©2024 Bloomberg LP