(Bloomberg) — Belt-tightening is underway around Boeing Co.’s vast aircraft manufacturing center in Seattle as the planemaker and its factory workers brace for a labor dispute that will test the resolve of both sides.
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Striking workers received their final Boeing paychecks on Thursday, and the company will stop paying their health insurance on Sept. 30. Both measures will strain household finances, which typically increases the pressure and stakes for union negotiators in contract negotiations to reach a deal.
But while workers look to the embattled manufacturer for better wages and benefits, the 33,000 members of IAM District 751 are taking full advantage of a tight labor market and a gig economy that offers quick transitions into low-skills jobs that help make ends meet. That gives the union bargaining power, potentially thwarting Boeing’s bid for a quick end to a dispute that’s costing the company an estimated $100 million a day.
Although the battle between one of the world’s largest exporters and its workers may seem like an unequal fight at first glance, Boeing is finding itself in an increasingly untenable position. Its financial situation is so bad that the company cannot afford to be paralyzed for a long time.
“I think everybody is set for the long haul,” said Christopher Dahl, 38, who has worked at Boeing for 10 years and now tests flight-control systems. “I’ve been in every strike because my parents were Boeing workers, so I know the game. And before that, there weren’t options like we’ve got to make money.”
Companies like food delivery service DoorDash Inc. or Uber Technologies Inc. didn’t exist 16 years ago, when Boeing’s largest labor union walked off the job and halted production of commercial aircraft for two months. Now, such companies, in addition to a still-tight labor market, offer potential options for sustaining the strike.
Workers are once again digging in for a holdout after antagonizing their union leaders by voting overwhelmingly to reject a 25% pay raise. On picket lines outside the Renton plant where Boeing builds its 737 Max jets, workers said they’ve been saving for years to strike until it lasts — with no pay, save for a $250 weekly deposit from the local IAM.
They are pushing for pay raises closer to the 40 percent that IAM District 751 leaders initially sought, along with annual bonuses that eliminate the Boeing offer. Some are even demanding that the planemaker restore their pensions.
With unemployment in Washington running at 4.9%, it’s easy to find temporary work doing construction or driving for Amazon.com Inc. Across the street from the Boeing Gate, where union members grilled hot dogs and waved to cars honking their horns in support, Topgolf Callaway Brands Corp. prominently displayed a sign reading “Now Hiring.”
“There are so many jobs everywhere,” said Luis Arteaga, 54, who has worked at Boeing for 18 years. “Red Robin is hiring, LA Fitness, every restaurant is hiring, FedEx, UPS — I mean, every place is hiring.”
Arteaga says he started planning his finances for this strike at least two years ago and that he could easily survive three months without a salary from Boeing, especially if he took on a part-time job.
Others on the 24-hour picket lines estimated they could hold out until Christmas. Carmen Kim, who struck with her husband — like her, a Boeing worker — is prepared to live without steady work for a whole year.
Boeing, meanwhile, is embarking on a wide range of cost-cutting measures to save money. The austerity measures include unpaid furloughs for tens of thousands of U.S. workers and a reduction in travel that has forced top executives to fly in economy class seats. The planemaker is even considering selling stock to shore up its rapidly dwindling cash flow and maintain its investment-grade credit rating.
“We remain committed to rebuilding our relationship with our represented employees and continuing discussions with the union to reach a new agreement as soon as possible that is right for all of our teammates and our company,” Boeing CEO Kelly Ortberg told employees in a memo.
The labor disputes at Boeing are notable because of themes that are also playing out at other U.S. companies: lost pensions and frustration over stagnant wages that are not keeping pace with inflation, said Brian Bryant, international president of the International Association of Machinists and Aerospace Workers.
“The entire labor movement is watching this very closely,” Bryant said in an interview. “This is not just a Boeing issue. Workers in this country have been left behind. There is a movement here. Workers have said enough is enough.”
The Biden administration is also closely monitoring the strike, said Bryant, whose union represents nearly 700,000 members across North America.
“They have reached out to see what the status is, what support they can provide, and what they can do to bring the parties back together,” he added.
Many machinists interviewed by Bloomberg News cited a strong sense of injustice over what they saw as union-busting tactics following the 2008 strike. One was Boeing opening a second assembly line for the 787 Dreamliner in South Carolina, hollowing out its Seattle production base.
“While new CEO Kelly Ortberg has taken a more conciliatory approach, 16 years of history are against him,” said Rob Stallard, an analyst at Vertical Research Partners, adding that “the gap between what IAM union members want and what Boeing is currently offering is wide.”
One controversial contract extension from 2014 stands out. IAM members were pressured into a long-term deal that froze their pensions, raised health care premiums and provided modest wage increases to keep production of the 777X jet in the Seattle area. It’s the deal that expired Sept. 12.
“For 10 years, the union had no room to maneuver and lost all its influence,” said Leon Grunberg, a professor emeritus of sociology at the University of Puget Sound. “That can contribute to the sense of retribution.”
Boeing can’t fall back on the same playbook in these talks. It has no new jet development program in the pipeline after five years of heavy financial losses. It also can’t shift more production to the Southeast, where unemployment in the region is still hovering near record lows.
In fact, striking Boeing workers say they are getting a lot of online job offers from Airbus SE, the company’s European rival, along with rocket maker Blue Origin LLC. Both have production facilities in Alabama, where unemployment stood at 2.8% in July.
Bruce McFarland, a Boeing instrumentation engineer and IAM official, pointed to another change that has transformed the union from previous strikes: the proliferation of social media accounts that allow union members to stay connected and keep morale high during the months when there is no work.
While it’s still early, many of his colleagues are driven by an idealistic goal and concerns about their bottom lines, he said. They want a fair contract, but they also want to rebuild Boeing’s culture so that workers are treated with dignity.
“I love my job, I love the work,” McFarland said. “Sometimes you have to question what the company is doing.”
–With assistance from Eric Johnson.
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