(CNN) – At the heart of the Boeing strike that began Friday is a story about what happens when tight-fisted executives lose their way and the onus falls on workers to get things back to normal.
Last year, Boeing did not make a profit. In fact, the plane maker has lost money every year since 2018, when a series of deadly accidents and near-disasters left its reputation and finances in tatters. If Boeing were any other business – and not one overly large and failing half of a global duopoly – it would almost certainly have filed for bankruptcy.
Even so, in 2023, the CEO, an accountant by training, received a 45% salary increase, to almost US$33 million.
Meanwhile, wages for Boeing’s 33,000 unionized employees have stagnated.
They are, simply, furious.
Years of pent-up resentment over Boeing mismanagement, combined with pandemic-era inflation and a resurgent labor movement, made this strike inevitable.
Boeing has a particularly troubled history between management and unions.
Previous strikes – the last one was in 2008 – “came about because one side wanted to destroy the other,” said Richard Aboulafia, managing director of AeroDynamic Advisory. But in recent years, he said, the animosity came more from management.
Boeing workers go on strike for better wages
In 2014, CEO James McNerney inflamed tensions with the rank and file when, on an investor call, he said he would delay his retirement because “hearts will still beat, employees will still cower.” Although he later apologized for the comment, calling it a “bad joke,” union members have not forgotten it even now, Aboulafia said.
All of this represents a first test, and an opportunity, for Boeing’s new CEO, Kelly Ortberg, who took over just five weeks ago.
Ortberg, a mechanical engineer with nearly four decades of experience in the aerospace industry, has the unenviable task of undoing a decade of executive mistakes that prioritized efficiency over quality and ruined the company’s relationship with its unionized workforce. approximately 20% of all Boeing employees.
A strike is not ideal for the new boss, especially given Boeing’s concurrent crises, with multiple federal investigations into the near-catastrophic door plug explosion in January, two of its astronauts trapped in space and waiting from being bailed out by Boeing rival SpaceX, plus a group of angry customers and a stock price that has lost 40% of its value this year.
But so far, Ortberg appears to have earned some goodwill. He spent his first day on the job last month touring the Renton, Washington, factory and announced that he would do his work primarily from the Seattle office, near several factories and about 1,300 miles from the company’s corporate offices in Virginia, which have came to symbolize Boeing’s departure from its roots.
Before the strike, Ortberg urged workers not to strike, while acknowledging his anger over nearly two decades of past contracts that reduced his retirement and health benefits.
“I think Mr. Ortberg was in a difficult position,” said Jon Holden, who led negotiations for the International Association of Machinists union. “It’s hard to take back 16 years, and I think that’s the position he found himself in.”
Aboulafia, a fierce critic of Boeing management, said he is optimistic that the strike can be resolved “pretty quickly.”
“Before you had an incredibly boring and unimaginative management team that only understood costs,” he said. “Now you have someone who understands what is at stake.”
To outsiders, the union’s rejection of Boeing’s offer, which included a 25% pay increase over four years, may come as a surprise.
Even union negotiators described the deal as the best they had ever seen from Boeing. Still, members, who were asking for a 40% pay increase over the four years of the contract (not as substantial as previous CEO Dave Calhoun’s one-year increase), voted overwhelmingly to reject it.
Holden said it’s difficult to point to a single reason for the rejection, although he noted that workers want more job security, more time off and higher wages to offset years of inflation.
Much of the rank-and-file anger stems from the company building a non-union plant in South Carolina in 2011 to handle some production of the 787 Dreamliner. In 2020, when the pandemic reduced demand for the plane, Boeing moved the rest of production from the
Dreamliner from its unionized Washington plant to South Carolina.
Resentment also grew after the union agreed to a series of concessions, including ending traditional pension plans, in 2011 and 2013, in order to get Boeing to abandon its plans to build more non-union plants.
The latest strike reflects a broader resurgence of power among unions in the United States. Almost exactly a year ago, the United Auto Workers (UAW) union won historic guarantees from the Big Three automakers following a seven-week strike.
The UAW made sacrifices, such as giving up traditional pensions, to help its companies as they hurtled toward bankruptcy and federal bailouts. But Boeing demanded concessions when times were good, sales were strong and revenues and profits were growing.
“I know many members have not healed from that wound,” Holden said Thursday night, referring to the loss of pension plans.
“Boeing workers are playing hardball not only by exercising the power they have now, but by what they have done before,” said Sharon Block, executive director of the Center for Labor and a Fair Economy at the Law School of Harvard. “This is a union that accepted concession contracts in the past, when the company was in a bad situation. And this is a union that saw the company move work out of state to get rid of the union.”
