Boeing workers are set to strike — and it could cost the company billions
Boeing workers picket outside the aviation giant's Renton, Washington plant on Friday, September 13, 2024.Lindsey Wasson/AP ImagesBoeing workers are striking for the first time since 2008.The walkout could cost the embattled planemaker billions in lost revenue if it drags on for months.Analysts say Boeing tends to mitigate the fallout by delaying orders instead of canceling them.Boeing is facing its first strike in 16 years — and it could deal a billion-dollar blow to the planemaker if it drags on.More than 30,000 factory workers are poised to walk out starting Friday morning after the International Association of Machinists and Aerospace Workers (IAM) overwhelmingly voted to reject a tentative labor agreement with Boeing, and to go on strike in pursuit of a better deal.Boeing's last strike in 2008 went on for almost two months, causing the company to deliver about 70 fewer commercial aircraft than usual in the affected quarter. The walkout depressed revenues in the period by $4.3 billion, Boeing said at the time.Another strike of that length would cost Boeing at least $3 billion, according to a TD Cowen research note cited by The New York Times. Jefferies analysts estimated a 30-day cash impact of $1.5 billion, and warned a strike "could destabilize suppliers and supply chains," CNBC reported. The rejected deal would have cost Boeing an extra $900 million a year if passed, they noted.A Boeing strike in 1989 cost the company $2.5 billion in lost revenue, and the next one in 2005 cost it about $1 billion, the American Action Forum noted in a paper this week. However, the conservative-leaning policy-analysis nonprofit said that Boeing might make some of that money later instead of missing out on it entirely."While strikes, especially recent ones, have been costly, there is no clear trend in how they have affected year-to-year revenue," the AAF researchers wrote. "This may be because Boeing generally delays orders rather than losing them, so their revenue is time-shifted rather than diminished."Even so, they noted the pending strike could be especially painful given Boeing recently agreed to a plea deal tied to the crashes of two 737 Max planes. If approved by a judge, the agreement would see Boeing pay a $244 million fine and invest an extra $455 million in compliance and safety programs."Considering the cost of the previous two strikes, combined with legal troubles related to manufacturing issues, a strike at this juncture could be particularly damaging," the AAF analysts said.Boeing is also weathering turbulence after the midair blowout of a door plug on one of its planes in January, which sparked investigations that revealed broad-based safety and quality issues and prompted regulatory restrictions on production. The company's Starliner space program has been hit by safety concerns too.The manufacturing titan employs nearly 150,000 people nationwide and ranks among the largest US exporters, meaning a strike that halts its operations could hit the broader economy along with its bottom line."While past IAM strikes have had relatively little effect on Boeing's revenue, the ripple effects of a future IAM strike against Boeing could indeed create significant disruption for the local economy and reverberate throughout the national supply chain," the AAF paper reads.Boeing CEO Kelly Ortberg, who only took over the company's controls in August, and his team said on Thursday they're prepared to return to the negotiating table. Quickly ending the strike would minimize its financial impact.Read the original article on Business Insider
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