This is what the Boeing strike is really all about CNN Business

New York
CNN
–

At the heart of the Boeing strike that began Friday is a story about what happens when penny-pinching executives lose the plot, and it falls to workers to get everyone back on track.

Last year, Boeing did not make a profit. In fact, the plane maker has lost money every year since 2018, when a series of fatal crashes and near-misses sent its reputation and finances down the drain. If Boeing were any other business – and not one half-big-failing of a global duopoly – it would almost certainly have declared bankruptcy.

Still, in 2023, the CEO — an accountant by training — got a 45% pay bump to about $33 million.

Meanwhile, wages for Boeing's 33,000 unionized employees have stagnated.

They are, quite simply, fierce.

Years of anger over Boeing's mismanagement combined with pandemic-era inflation and a resurgent labor movement made the strike inevitable.

Boeing has had a particularly rocky history between management and unions.

Richard Aboulafia, managing director of Aerodynamic Advisory, said past strikes – the last in 2008 – “occurred because one side wanted to destroy the other.” But in recent years, he said, there has been more hostility from management.

In 2014, CEO James McNerney stirred excitement among the rank and file when, on an investor call, he said he would delay his retirement because “hearts will still be beating, employees will still be scared.” Although he later apologized for the comment, calling it a “joke gone bad,” union members still haven't forgotten it, Abulfia said.

All of this presents an early test and an opportunity for Boeing's new CEO, Kelly Ortberg, who took over just five weeks ago.

Ortberg, a mechanical engineer with nearly four decades of experience in the aerospace industry, has the unenviable task of undoing a decade's worth of executive missteps that prioritized efficiency over quality and damaged the company's relationship with its unionized workforce — about 20% of Boeing employees. .

A strike is hardly ideal for the new boss, especially given the crisis concurrent with multiple federal investigations into Boeing's near-catastrophic door-plug blowout in January, with two of its astronauts stranded in space and awaiting rescue from Boeing's rival, SpaceX, and an angry cadre. . customers and a stock price that has lost 40% of its value this year.

But so far, Ortberg seems to have generated some goodwill. He spent his first day on the job last month on the factory floor in Renton, Washington, and announced that he will primarily work from the Seattle office, close to several factories and 2,300 miles from the company's corporate office in Virginia. A symbol of Boeing's departure from its roots.

Before the strike, Ortberg urged workers not to strike, citing their anger over nearly two decades of contracts that slashed their retirement and health care benefits.

“I think Mr. Ortberg came into a difficult position,” said John Holden, who led negotiations for the International Association of Machinists Unions. “It's hard to make it for 16 years, and I think that's the position he was in.”

Abulfia, a staunch critic of Boeing's management, said he was hopeful the strike could be ended “very quickly.”

“You previously had an incredibly dull and unimaginative leadership team and they only understood the cost,” he said. “Now you have someone who understands what's at stake.”

To outsiders, the union's rejection of Boeing's offer, which included a 25% pay increase over four years, may have come as a surprise.

Even union negotiators described the deal as the best seen from Boeing. Still, members — who asked for a 40% pay raise in a four-year deal (not as steep as former CEO Dave Calhoun's one-year bump) — voted overwhelmingly to reject it.

Holden said it's hard to pinpoint a single reason for the pushback, though he noted that workers want better job security, more time off and higher wages to make up for years of inflation.

Much of the anger from the rank-and-file stems from the company building a non-union plant in South Carolina in 2011 to handle some production of the 787 Dreamliner. In 2020, as demand for aircraft increased during the pandemic, Boeing moved its remaining Dreamliner production from its Union plant in Washington to South Carolina.

Anger also arose after Boeing accepted a series of concessions in 2011 and 2013, including the termination of traditional union pension plans, to drop plans to build more non-union plants.

The latest strike reflects a broader resurgence of power among unions in the United States Almost a year ago, the United Auto Workers union won historic guarantees from the Big Three automakers after a seven-week strike.

The UAW made sacrifices such as giving up traditional pensions to help their companies as they lurched toward bankruptcy and federal bailouts. But Boeing demanded these concessions when times were good, sales were strong, and revenues and profits were growing.

“I know a lot of members haven't healed from that wound,” Holden said Thursday night, referring to the pension plan's losses.

“Boeing workers aren't playing hardball to exercise their power right now but are informed by what has come before,” said Sharon Block, executive director of Harvard Law School's Center for Labor and a Just Economy. “This is a union that has agreed to concessions in the past when the company was in bad shape. And it was a union that saw the company move work out of the state to get out of the union.”