All the consequences of the huge strike for Boeing
On Friday evening, Boeing workers went on strike, the first called by employees since 2008, after rejecting the proposal to renew the recently expired contract, which provided for a 25% increase in wages. Negotiations will resume tomorrow
Arms crossed for over 30 thousand employees of the aerospace giant Boeing.
On September 13, workers at factories in the Seattle area on the West Coast of the United States, home to the majority of Boeing's commercial aircraft production, called a strike after voting 95% against the contract negotiated by the top management of the company .
The historic strike, which began on Friday night, involves around 33 thousand workers and is the first called by Boeing employees since 2008; It comes a month after the appointment of new CEO Kelly Ortberg, who promised to restore confidence in the company after the disasters and flight accidents involving Boeing airliners in recent years.
The American plane maker is already under scrutiny from authorities after the door on the 737 Max 9 blew out on Alaska Airlines Flight 1282 on January 5, and Boeing is losing a lot of money and consumer confidence in the meantime. Since that crash, Boeing's stock price has fallen 37%, compared with a 7.7% rise in the blue-chip Dow index. The company's shares fell 3.7% on Friday.
The mobilization involves blocking the production of the company's best-selling aircraft, taking into account that the US Federal Aviation Administration (FAA) has already limited the group's production to 38 737 Max per month. Without forgetting that a long pause in aircraft production would also weigh on the airlines that fly Boeing jets ( see the recent controversies of the CEO of Ryanair ), and on the suppliers that produce parts.
For its part, Boeing said it remains "committed" to negotiations that will resume tomorrow according to the union .
All the details.
THE PROPOSAL FOR AGREEMENT
The proposal included a 25% salary increase until 2027 (while employees were asking for a 40% increase), a $3,000 bonus and a commitment to build the new commercial airplane that Boeing would like to launch in the Seattle area by 2028 Not only that, the tentative agreement promised union members more say in the company's safety and quality issues.
REJECTED BY THE UNIONS
Boeing workers in the Seattle region, organized within the International Association of Machinists and Aerospace Workers (IAM – pictured) voted 96% in favor of the strike and 94.6% to reject the agreement. The union, which represents about 33,000 workers in the Pacific Northwest, initially supported the deal.
WHAT CEO ORTBERG HAD SAID
“A strike would jeopardize our shared recovery, further eroding our customers' trust,” Kelly Ortberg said in a message to employees before the vote.
WHAT WILL HAPPEN NOW?
A strike at Boeing "could last a long time" as workers are confident they can get bigger pay raises and a better pension, union leader Jon Holden said in an interview with National Public Radio (NPR) on Saturday.
Boeing and union negotiators are expected to return to the negotiating table tomorrow, in talks overseen by US federal mediators.
THE CONSEQUENCES OF THE STRIKE FOR BOEING
Meanwhile, the strike will close two major aircraft assembly plants in the Puget Sound region and cripple production of the 737, 777 and 767 freighters, deliveries of which are already being delayed.
Also on Friday, Boeing's chief financial officer admitted that the mobilization will make it "more difficult for the planemaker to meet its 737 Max production goal and stabilize its supply chain."
At the Morgan Stanley Laguna Conference, Boeing CFO Brian West admitted that the strike was "disappointing", "because things were starting to move in the right direction". “We're working on every responsible lever to do what's right to save money,” West said. “Our expectation, and I don't have a timeline, is that we want to come back to the table and get a deal done.”
ANALYSTS COMMENT
According to a note from investment bank TD Cowen, a 50-day strike could cost Boeing an estimated $3 billion to $3.5 billion in cash flow. Boeing's last workers' strike in 2008 closed plants for 52 days and hit revenues by an estimated $100 million a day.
As the Financial Times recalls, the “production slowdown has cost Boeing billions in free cash flow. A prolonged strike would hamper the company's ability to deliver planes to customers, further hurting its cash flow."
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/tutte-le-conseguenze-del-maxi-sciopero-per-boeing/ on Mon, 16 Sep 2024 09:33:02 +0000.