Boeing Union Negotiations Collapse Amid Disputes Over Pensions and Pay
The third week of strikes by nearly 33,000 unionized Boeing factory workers is underway after talks between the union and the aerospace titan broke down over the weekend.
The International Association of Machinists and Aerospace Workers (IAM) stated in a post late Friday that no progress has been made on a new labor contract with Boeing.
Sticking Points in Negotiations
IAM District 751 said, "While conversations were direct, we did not make progress on the pension issue. The company remains adamant that it will not unfreeze the defined benefit plan. The company also would not engage substantively about other issues that the membership has made clear remain top priorities, like higher pay, quicker wage progression, and more PTO."
The union was more direct, stating, "Talks broke off, and we have no further dates scheduled at this time." Federal mediators were leading the talks late on Friday.
Boeing's Response
On Saturday morning, Boeing informed AP News that it was "prepared to meet at any time" with IAM negotiators to bargain in good faith and reach a labor deal as quickly as possible.
Earlier in the week, Boeing had presented its "best and final offer" for a new labor contract with IAM. This offer included a general pay increase of 30% over four years, reinstatement of the performance bonus, enhancement of retirement benefits, and doubling the ratification bonus to $6,000.
However, IAM leaders rejected the offer, stating that it "missed the mark on many of the things our members said were important to them." The union's initial demand was a 40% pay increase over three years.
Financial Impact on Boeing
Bloomberg has noted that each day of the strike has cost Boeing around $100 million, according to some estimates. This has forced the company to initiate a broad savings push, which includes worker furloughs, a hiring freeze, and a reduction in corporate travel.
Several credit rating agencies, including Fitch and Moody's, have warned in recent weeks that Boeing's credit rating could be downgraded from investment grade to junk bond status. Standard & Poor's had already warned that a downgrade would likely occur after the strike materialized.
The last strike by Boeing machinists took place on September 7, 2008. The strike was over job security, outsourcing, pay, and benefits, and it resulted in a $1.2 billion hit to the company's net income. It is expected that the current labor action will be more costly.
Impact on Boeing's Supplier Network
Boeing's supplier network is also at risk of disruption. The latest Boeing shipments primarily come from India, Turkey, South Korea, Mexico, and China, according to risk management firm Sayari Labs. Suppliers in these regions are likely to be the most impacted.
In the markets, Boeing shares in New York have fallen 40% on the year (as of Friday's close). Since peaking at $440 a share in 2019 (around the Max crashes), shares are 65% off the high, fluctuating between $250 and $100 since the early 2020 crash.
Bottom Line
The stalemate between Boeing and its unionized workers over pensions and pay is a complex issue with wide-ranging implications for the company, its workers, and its suppliers. It's clear that the financial impact of the strike is significant and could potentially lead to further consequences for Boeing's credit rating and stock price. What are your thoughts on this matter? Feel free to share this article with your friends and discuss it further. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.
