Striking Machinists Bet Boeing Can’t Fix Itself Without Them

Nearly every union victory in the pandemic rebound has happened because employers had cash to burn—and unions knew it.

But that’s not the case with the Boeing Co. The plane maker is saddled with $45 billion in debt and bleeding millions more each day its factories sit idle due to an ongoing machinists strike in the Pacific Northwest. Yet those 33,000 workers still think they can win big raises, due to an abiding belief that Boeing still needs them more then they need Boeing.

It may sound counterintuitive, but the International Association of Machinists and labor analysts say Boeing’s financial struggles actually give the union more leverage, because the company won’t be able to hold out for long under the financial pressure of a strike. Boeing has dug in, however, rejecting the union’s demand for a 40% pay increase. It’s a stalemate with no end in sight.

If the machinists win at the bargaining table, they’ll join recent victories for organized labor which in 2023 collectively won the largest first-year wage increases in nearly 40 years, predicated on a strong economy. Companies had dough, and unions wanted it.

“It’s the company’s problem to pay the bill,” said Seth Harris, a former senior labor adviser to President Joe Biden. “The workers’ perspective is, ‘You broke it, you fix it, but we’re not going to let you fix it on our backs.’”

What’s on the Table

Boeing put forth a new proposal Sept. 24 that was roundly criticized by union leaders, who accused the company of circumventing normal collective bargaining channels. In an explainer video texted to striking workers, the plane manufacturer said an employee making $45 an hour would top out at $60 under its agreement, totaling $126,000 a year before overtime. It also includes a $6,000 ratification bonus.

The proposal, which the company said is its last and final offer, amounted to a 30% raise, upping its initial offer of a 25% increase that workers overwhelmingly rejected. It has been poorly received by the union, still angry from the 2014 contract that axed pensions and locked in paltry raises for the next 10 years.

The back-and-forth suggests Boeing is more eager to reach a settlement than the machinists are—and that its plan to appeal directly to union members may have backfired.

“The bottom line is this is a major player and clearly management is attempting to end the strike,” said Diane Swonk, chief economist for KPMG LLP where Boeing is a client. “They upped the offer and they want to get back to the negotiating table.”

The union’s negotiating team said it was blindsided by the latest offer, and wouldn’t be able to schedule a vote before Boeing’s initial Friday deadline, signaling the strike will run through the weekend and probably longer. Strikes at Boeing historically have lasted 45 to 65 days, part of the reason management is pressing so hard for a deal, Swonk, who didn’t speak on behalf of Boeing, said.

IAM leaders blasted Boeing for sending the offer directly to members after talks had broken down, saying it was done in bad faith

“This proposal does not go far enough to address your concerns, and Boeing has missed the mark with this proposal,” the Machinists’ bargaining committee said in a statement to members. “They are trying to drive a wedge between our members and weaken our solidarity with this divisive strategy.”

In a statement Tuesday, Boeing said it had reached out to the union offering more time to vote.

“This strike is affecting our team and our communities, and we believe our employees should have the opportunity to vote on our offer that makes significant improvements in wages and benefits,” Boeing spokeswoman Bobbie Egan said.

Boeing declined to make company officials available for an interview. IAM District 751 didn’t respond to a request for comment.

Looking for Leverage

The situation with Boeing hearkens back to another transportation debacle in 2008, when the financial crisis pushed US car companies to the brink of collapse. The United Auto Workers agreed to steep cuts to keep General Motors Co., Chrysler Corp., and Ford Motor Co. afloat. It wasn’t until 2023 that the union was able to claw back some of the biggest concessions on wages and cost-of-living adjustments. Some never returned.

There are key differences with Boeing, however, labor analysts and government officials say. While the auto companies were brought down by market forces, Boeing’s crisis is self made.

“Even if profits were your No. 1 goal, safety really needs to be your No. 1 goal because it’s hard to be profitable if you’re not safe, and I think Boeing certainly has learned that,” FAA Administrator Mike Whitaker said during a US House subcommittee hearing Sept. 24. “Whatever money might have been saved has certainly been lost in the fallout.”

But while Boeing has lost more than $25 billion since 2019, it’s not near bankruptcy. That’s one of the reasons the union has called the company’s bluff, saying it can afford more than it has offered.

“We’re not in a situation like 2008 and 2009 at this point,” said Tom Kochan, a professor emeritus at MIT’s Sloan School of Management. Boeing must show it can deliver safe airplanes on time, he said, and “a long strike will make it more difficult to maintain that customer support.”

The company’s financial situation is unlikely to improve without making planes. Moreover, it could be tough for Boeing to find qualified replacement workers, especially given its safety record.

“You can’t build the planes without the people who build the planes,” said Harris, the former Biden adviser. “Until they settle the strike, they’re not going to be able to get revenue going again.”