Boeing's current situation is quite difficult for one side and the eight sides are adding to the chaos. The International Association of Mechanical Engineers and Aerospace Workers (IAM), representing 32000 Boeing mechanics in the Seattle area, is demanding a 40% salary increase from Boeing over the next three to four years.
Jon Holden, the President of the 751st District of the union, stated that the goal is to negotiate a labor contract that is acceptable to both union leaders and members, and that the union is fully prepared for the strike.
In 2014, the union reached an agreement with Boeing to lock in a minimum salary increase and sacrifice pension benefits. Radicals within the union regretted this for ten years and finally saw the dawn of change this year.
Especially after last year's massive automobile strike and Hollywood actor and screenwriter strike in the United States, IAM has more confidence and confidence to mediate with Boeing. Holden stated that he will follow the car workers on strike in Detroit and Hollywood actors and screenwriters to seek significantly improved salary and other welfare terms.
The strike by Boeing's mechanics will affect Boeing's factories in Washington and Oregon, and its most profitable 737 jet aircraft assembly line may be closed as a result.
The labor negotiations will begin on March 8th, which will obviously exacerbate Boeing's predicament. The company has faced heavy pressure from the government, investors, and the market due to a continuous stream of quality issues, and the threat of strikes by its own employees will become one of Boeing's latest setbacks.
Human resource dilemma
Analyst Ruiping stated that Boeing employees have no loyalty to the company because Boeing is not loyal to its employees. In labor negotiations ten years ago, Boeing successfully saved on its pension and limited the average wage increase to less than 1%. The cost savings were considered a success at the time, but now it's unclear whether it's a blessing or a curse.
Holden pointed out that Boeing threatened the union to accept its "insulting" terms by moving out of Seattle, and so far union members have been very angry about it. He said he still heard voices of dissatisfaction in different parts of the Boeing factory.
At present, when Boeing is deeply in trouble and the US labor market continues to be hot, it seems difficult for Boeing to regain the same negotiating advantage as ten years ago. Boeing can no longer threaten to relocate factories, nor can it afford the cost of shutdown, which gives the union an extremely advantageous position in the upcoming negotiations.
Ken Herbert, a capital markets analyst at Royal Bank of Canada, believes that unions will have the upper hand. He said that if there is a moment when the union can achieve its goals, it is now.
Jefferies analyst Sheila Kahyaoglu estimates the possible cost, predicting that for every 10% increase in mechanic wages, Boeing's free cash flow for 2026 will decrease by $260 million.
Others have seen the connection between Boeing's quality issues and labor disputes. Cliff Collier, a senior consultant in the aerospace manufacturing industry, said that Boeing's recent difficulties stem from personnel mobility. After the epidemic, a large number of inexperienced workers and managers flooded in, and their labor strategy led to many old employees leaving early, resulting in Boeing's quality management system losing control.
He pointed out that people do not suddenly become foolish, they only overwork and are forced to do things they may not have done before.