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Boeing (BA) is bleeding cash, yet offered a reasonable deal including a commitment to build the next plane in Seattle. The union walked out.

Boeing Workers Go on Strike

The Wall Street Journal reports Boeing Union Goes on Strike, Halting 737 Production

Boeing’s (BA) biggest labor union went on strike, halting production of its bestselling jets and dealing the latest blow to the struggling aerospace giant.

Thousands of machinists who build Boeing’s 737, 777 and 767 jets walked off the job shortly after midnight Pacific time Friday, after rejecting a labor deal struck between the union’s leaders and Boeing’s executives. The contract offered 25% wage increases over four years.

Union leaders of the 33,000-member International Association of Machinists and Aerospace Workers chapter said about 94% of their members voted to reject the contract and 96% voted to go on strike.

The strike will deal a financial blow when Boeing is bleeding cash and piling up debt following January’s Alaska Airlines accident in which a door plug blew off a 737 MAX jetliner in midair. A prolonged stoppage threatens to further strain the industry’s supply chain and exacerbate jet shortages for airlines.

The deal fell short of what the union had said was a hard line, including a 40% pay increase over four years.

“While there were many important things that were in this offer, it did not bridge the gap for 16 years and going through two extensions, the threats of job loss, stagnant wages, the cost shift on healthcare and many other issues,” Jon Holden, president of the IAM chapter, said after announcing the vote tally.

Under the rejected deal, workers’ base pay rate would have increased 11% this year, bringing the minimum hourly rate for workers to between $20 to $37 based on their position. It called for raises of 4% next year, 4% in 2026 and 6% in 2027. Boeing said average wages would increase 33% over four years because of seniority increases. 

Along with the pay increases, the contract would bolster retirement benefits, lower healthcare costs and commit Boeing to building its next plane in the unionized Pacific Northwest, a crucial union demand.

Framing the Discussion

It’s easy to frame this discussion however one wants. For example, one worker complained …

The proposed starting wage under the new contract—$21 an hour—was similar to the starting wages at a local burger chain, Dick’s Drive-In, which offers free employee health insurance and 401(k) matching. “You can make more money flipping burgers,” he said. 

Well, if you can make more money flipping burgers, then it would seem the smart thing to do might be to flip burgers.

In other words, the comment is a nice sound bite, but it’s a lie.

What Should Boeing Do?

My suggestion would be to get the hell out of Seattle and move the whole operation to a non-union, right-to-work state.

Of course, Biden would howl, and the National Labor Relations Board would block the move.

Blocking corporate moves is something that desperately needs a Supreme Court decision. It’s ridiculous that companies cannot move wherever they want for whatever reason they want.

Consumers Take the Hit

As a result of enormous UAW wins, prices of autos have nowhere to go but up.

In the case of Boeing, airline tickets will increase. Someone will pay for 33 percent wage increased on manufactured planes, and that someone is you.

Whether you think a 33 percent wage increase over four years is warranted, the contract settlement is guaranteed to add to inflation pressures.

If the wage increase was based on improved productivity, cost pressures would be minimum. But where’s the improved productivity when the contract will aim to minimize layoffs and reduce automation?

Big Business vs Small Business

Boeing is big business. Most of the job gains over the past year are from big business.

But small businesses are the actual lifeblood of the economy.

On September 5, I noted Small Businesses Reducing Workers for the Last Four Months

ADP data shows small businesses with 1-49 workers have been reducing workers for four months. Those with 20-49 workers have shed workers for 7 straight months.

And on September 10, I commented NFIB “Mood on Main Street Darkens” Small Business Optimism Dips

How long can big businesses keep the economy humming?

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