What the Boeing strike is really about

() – At the heart of the Boeing strike that began Friday is a story about what happens when tight-fisted executives lose their way and it falls to workers to get things back on track.

Last year, Boeing didn’t make a profit. In fact, the planemaker has lost money every year since 2018, when a series of deadly accidents and near-disasters left its reputation and finances in tatters. If Boeing were any other business — and not an oversized and failing half of a global duopoly — it would almost certainly have filed for bankruptcy.

Still, in 2023, the CEO, an accountant by training, received a 45% pay increase to nearly $33 million.
Meanwhile, wages for Boeing’s 33,000 unionized employees have stagnated.

They are, quite simply, furious.

Years of pent-up resentment over Boeing’s mismanagement, combined with pandemic-era inflation and a resurgent labor movement, made this strike inevitable.

Boeing has a particularly checkered history between management and unions.

Previous strikes — the last was in 2008 — “happened because one side wanted to destroy the other,” said Richard Aboulafia, managing director of AeroDynamic Advisory. But in recent years, he said, the animosity came more from management.

In 2014, CEO James McNerney inflamed tensions with the rank and file when, on an investor call, he said he would delay his retirement because “the heart will still beat, the employees will still cower.” Though he later apologized for the comment, calling it a “bad joke,” union members have not forgotten it even now, Aboulafia said.

All of this represents a first 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 of executive missteps that prioritized efficiency over quality and ruined the company’s relationship with its unionized workforce, roughly 20 percent of all Boeing employees.

A strike is hardly ideal for the new boss, especially given Boeing’s concurrent crises, with multiple federal investigations into the near-catastrophic door stopper explosion in January, two of its astronauts trapped in space and awaiting rescue by Boeing rival SpaceX, an angry customer base and a stock price that has lost 40% of its value this year.

But so far, Ortberg appears to have earned some goodwill. He spent his first day on the job last month touring the Renton, Wash., factory and announced that he would do his work primarily from the Seattle office, close to several factories and about 1,400 miles from the company’s corporate headquarters in Virginia, which has come to symbolize Boeing’s move away from its roots.

Before the strike, Ortberg urged workers not to go on strike, while acknowledging his anger over nearly two decades of past contracts that cut his retirement and health care benefits.

“I think Mr. Ortberg was in a difficult position,” said Jon Holden, who led negotiations for the International Association of Machinists union. “It’s hard to make up 16 years, and I think that’s the position he was in.”

Aboulafia, a fierce critic of Boeing’s management, said he is optimistic that the strike can be resolved “fairly quickly.”
“Before, you had an incredibly boring and unimaginative management team that only understood costs,” he said. “Now you have someone who understands what is at stake.”

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

Even union negotiators described the deal as the best they had ever seen from Boeing. Still, union members, who were seeking a 40 percent pay increase over the four years of the contract (not as substantial as the one-year raise under previous CEO Dave Calhoun), voted overwhelmingly to reject it.

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

Much of the rank-and-file anger stems from the company’s construction of a nonunion plant in South Carolina in 2011 to handle some of the 787 Dreamliner’s production. In 2020, when the pandemic reduced demand for the plane, Boeing moved the remainder of the company’s production to the United States.

Dreamliner from its unionized Washington plant to South Carolina.

Resentment also grew after the union agreed to a series of concessions, including an end to traditional pension plans, in 2011 and 2013 in an effort to get Boeing to abandon plans to build more nonunion plants.

The latest strike reflects a broader resurgence of power among unions in the United States. Almost exactly a year ago, the United Auto Workers (UAW) won historic guarantees from the Big Three automakers after seven weeks of strike action.

The UAW made sacrifices, such as waiving traditional pensions, to help its companies when they were hurtling toward bankruptcy and federal bailouts. But Boeing demanded the concessions when times were good, sales were strong and revenue and profits were growing.

“I know that many members have not healed from that wound,” Holden said Thursday night, referring to the loss of pension plans.

“Boeing workers are playing hardball not just because of the power they have right now, but because of what they’ve done before,” said Sharon Block, executive director of the Center for Labor and a Fair Economy at Harvard Law School. “This is a union that took concession contracts in the past when the company was in bad shape. And this is a union that saw the company move work out of state to get rid of the union.”