Simone Del Rosario

More than 30,000 Boeing factory workers overwhelmingly voted to walk off the job Friday. 

96% of the Pacific Northwest workers from the International Association of Machinists voted in favor of the strike after rejecting a tentative agreement between Boeing and the union. 

Jacqueline Vaden: I’m ready. I’ve been preparing for this for a while. I honestly don’t think we’re going to be out that long. It’s not a win-win for nobody when you go out on strike, but you got to do what you got to do.

Simone Del Rosario: Picketers said they were confident they wouldn’t be on strike too long. They rejected a deal that would have given 25% raises over four years. The union had pushed for 40%. 

Boeing’s last strike was in 2008. It lasted for eight weeks and cost the company $100 million per day in deferred revenue. 

I want to bring in Richard Aboulafia, Managing Director of Aerodynamic Advisory. Richard, it is never a good time to lose 33,000 workers, but why is this moment in particular bad time for Boeing?

Richard Aboulafia: Well, there’s good and bad news, really the bad first for your question. They are way behind in aircraft deliveries and losing market share fast to Airbus. And a lot of their customers are deeply aggrieved, understandably, by this. And of course, there are doubts about their core product line in terms of, shall we say, the reliability of the manufacturing process. So to have a strike come on top of all of this is not good.

Now the positive news is that for the first time in several decades, they actually have a CEO who understands the industry and I think can behave appropriately.

Simone Del Rosario: Okay, so you’re bullish on Kelly Ortberg, but how does this look for him? I mean, he’s just been on the job for a few weeks now and you couldn’t make a deal work with the union.

Richard Aboulafia: Well, yeah, I mean, but remember he did get a deal with union management. I think both union management and Boeing management were a bit blindsided by the perhaps understandable anger that had built up in the workforce after several decades of maltreatment. But now hopefully they can work together to understand what needs to be done to get the workers happy and back to work. So I tend to be pretty optimistic. know, that last strike you mentioned, you know, the CEO at the time, McNerney, his ambition was to break the back of labor. He never saw the value of cooperation. He was interviewed on, I believe, or heard on a live mic saying, you know, the workers will still be cowering or something vaguely amateurish and kind of childish like that. Kelly Ortberg is the exact opposite. So I think this is going to be handled a lot faster.

Simone Del Rosario: But Boeing had told employees earlier this week that they didn’t really hold anything back with this offer that was on the table, saying they put it all out there. In fact, reports earlier this week said that they thought that they would be able to avoid a strike. So what happened between what we thought would happen, what all the talk was out there? You said they reached a deal with union leadership versus a 96% vote to go on strike.

Richard Aboulafia: Yeah, bit of a disconnect there, that’s for sure. Clearly, everyone involved perhaps underestimated the level of grievance that had been built up and a determination to show that they did in fact hold the cards this time. But the very fact that Boeing management issued a statement saying, we’re going to go right back to the negotiating table means that maybe they didn’t have everything. Obviously, they’re talking again.

Simone Del Rosario: Yeah, I mean, they didn’t say best and final. They clearly aren’t walking. The 33,000 workers are the ones that are walking at this point. Let’s dig into some of that disgruntled behavior, if you will. The union accusations, they said that there was discriminatory conduct, coercive questioning, unlawful surveillance, and unlawful promise of benefits. These are really strong words against Boeing. What’s the culture been like? And I would assume this really predates, obviously, the Kelly Ortberg era, but certainly there’s a lot of space between the union and the company here.

Richard Aboulafia: Yeah, and just a lot of bad blood under the bridge to mix metaphors. You had a couple decades of management by people who frankly weren’t aerospace people for the most part. They were one size fits all, when in doubt, cut costs people. They were from the Jack Welch General Electric School of Management. They knew the cost of everything and the value of nothing. The results, well, they speak for themselves, a lot of ill will and a culture that’s gone badly wrong.

Even if half of these accusations are correct, that’s really bad. So I understand completely where the workers are coming from, but hopefully they also realize that Kelly Ortberg has only had a couple of weeks on the job to try to change the culture, and it’s a long road ahead towards getting it back. And hopefully they can find accommodation on what matters most, probably wages, and getting back some of their lost ground.

Simone Del Rosario: How do you think that this strike is going to most affect the company in the immediate term?

Richard Aboulafia: Well, in the immediate term, you know, it kind of reminds me of the Spirit AeroSystem strike that we saw back in June 2023. Everyone was shocked and prepared for the worst and Spirit is the producer of the entire body of Boeing’s mainstay product, the 737. It lasted three days. Basically, you had a person at the helm, Tom Gentile at Spirit, who said, look, this is the fact of life and I’ve got some damage to repair. And it was good in three days.

To this day, I have to remind people of this happening because no one cares anymore, right? I’m kind of hoping it’s a return to that, but no guarantees.

Simone Del Rosario: 

What about some of the highlights to the deal? Obviously the company’s not going to be taking away some of those perks that are in there. They’re going to be sweetening the deal for the union to come back and come back to work. What did you think were some of the highlights of the agreement that didn’t get ratified but was out there like building a new plane in Seattle?

Richard Aboulafia: Yeah, there are a couple of things that I think were positive. There was a request for a return to a structured pension. It wasn’t in the cards, but they had a pretty generous 401k increase. There was kind of a, it was an if we launch a new product in the next four years of the contract that we will build it in Fugit Sound. That was good for some, maybe other people said, well,

What if they don’t launch it in four years? I think, however, the elimination of the bonus and the fact that they didn’t reach the headline numbers that other people have reached with their unions in the aerospace industry, the 40 % range, was probably the big standout for most people.

Simone Del Rosario: Richard Aboulafia, Managing Director at Aerodynamic Advisory. Thank you so much for your thoughts on this today. We’ll be following the strike closely.