Over the last year Boeing has faced a number of issues with it's production and economic status. On January 6th, 2024, they were forced to ground all of their best selling commercial planes due to quality and safety concerns. This grounding was due to an Alaska Airlines flight, flown by a Boeing 787 Max, had a fuselage panel ripped off mid flight leading to an emergency landing. With other recent safety concerns over plane quality control the FAA (Federal Aviation Administration) have launched an investigation to ensure quality control of future planes. Following these issues there was whistleblowers and other allegations that have not been fully resolved involving the engineering ethics of and quality control of Boeing airlines.
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| Boeing 737-9 Max (Alaska Airlines) |
On September 13th, the union factory workers that operate one parts and two airplane assembly factories owned by Boeing are set to vote on a new union contract. In light of these events: "two fatal crashes that killed 346 people, a 20-month grounding of its best-selling jet," and the Alaska Airlines flight according to CNN the Union has a large amount of bargaining power thanks to the large decrease in stock price and overall price loss for the company. The union is asking for a 25% wage increase, improved healthcare, and better retirement benefits. If the deal is passed it will cost "$900 million" annually according to Boeing CEO Kelly Ortberg. For the union workers the deal is crucial as they previously accepted deals that reduced retirement benefits and healthcare costs, leading to general worker upset.
The workers are threatening a strike if an acceptable detail is not reached. According to IAM District 751 President Jon Holden, "We have achieved everything we could in bargaining, short of a strike," Regardless, he doesn't recommend a strike as they may not be able to further the deal. However, if a strike is enacted the company would be forced to either shutdown the plants or pivot and accept more of the demands from the Union. From Kelly Ortberg the strike could cost the company "$1.5 billion," a huge hit to their bottom line and profits. Additionally, the impact of a strike not only affects the union plants but suppliers and receivers of Boeing planes, causing a ripple effect damaging the profits of multiple companies. It would upset supply chains to other factories, companies, and within the internals of the company itself.
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| Boeing Stock Price (1 year) |
With the onset of this looming deadline and the economic downsides to both agreeing and disagreeing with the deal Boeing has been placed into a difficult position. If they accept, they will keep the factories open and continue production but the raise in pay will cost more and reduce their falling profits even further. If they decline, the Union may strike leading to closure of production and massive losses for the company. In combination with their recent commercial and safety failures as a company Boeing faces serious threat to its long-term survival as the dominant US producer of airplanes. If the company falls further they may be forced to perform mass-closure or layoffs, some of which are domestic American workers.
Update: As of September 14th, the workes went on strike as the deal didn't fit there demands. They hope to achieve the deal they want, a 40% increase in wages over 4 years over Boeing's 25% offer. The outcome of the strike remains unknown but based on recent similar events, like the Auto Workers Union strike it may end in success especially with Boeing's constant losses over the last six years. This stems from post-covid economic damage including inflation and an increase in Union power. However, the outcome remains unknown and only time will tell if the unions will win again.If they do win Boeing will face even further losses and could indicate the final nail in the coffin for the Aviation super corporation.
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5 comments:
Boeing is a classic example of corporate greed, as evident by their cutting corners on safety processes and their refusal to pay workers a fair wage. Boeing's recent shortcomings in safety have made national news with shows of parts breaking and workers coming out as whistle-blowers against the company. To an outsider, looking at Boeing's falling profit margins and the loss of public trust in the company, it would appear that the company is under severe mismanagement, but the CEO was given a 45% pay increase from $22 million to $33 million during this spring (worth noting that Boeing recently got a new CEO). One of the important details to note in this strike is that one of Boeing's manufacturing facilities is unaffected by this strike, as their South Carolina plant is non-union. Boeing's struggles with workers surrounding wages seem to be isolated to workers in Washington state, which is much more union-friendly than South Carolina. Boeing has already tried to cope with the strikes by moving some of the company's manufacturing to the South Carolina plant. With ever-falling profit margins, will a company like Boeing, so desperate to raise their profit margins to support the greedy management, look for a move to a more business-friendly state? To me, Boeing's story is not only about business vs. workers but about politics pulling the strings behind the scenes.
On top of the union striking there is another big point to be made that could decide their future: the investigations that are happening against them. As you stated at the top there was an accident that happened recently with the Alaska airlines flight. Following this incident there was a hearing that stated many interesting points. One of these points was related to the Alaska Airlines flight, where the subcontractor making the door was reported using “dawn dish soap” to lubricate the doors and using a “hotel key card” to be checked. Their reports came directly from the subcontractor which makes it very reliable. This questions the serious safety and quality issues that have been plaguing the Boeing company’s recent planes. It is very frustrating to see a powerful company like Boeing cut corners that puts many lives at risk. The company image is put on the stand and if they don’t do something about these concerns we may see another company rise to power while Boeing crashes down.
On top of all this economic stuff about perhaps losing workers unions and corporate greed, both of which are two major issues that should definitely be addressed, the other important issue is Boeing's reputation - with the crashes that happened and Boeing's general lackluster quality and innovation, investors are hesitant to put their money into a company that doesn't seem to promise anything special to investors, and the general public, being made aware of scandal after scandal about Boeing, will come to have a general distaste in their mouths about Boeing and how the company handles everything. Although most likely this won't mean anything much in the sense that the bulk of the economic damage to Boeing may have already been done, Boeing should still note that they are sort of on a weaker hand -- failure to secure a union contract means Boeing may face the possibility of being removed from perhaps being a contractor with the US government.
The people who question safety and quality issues are known as the Whistleblowers (similar to watchdogs in Journalism). I read an article from NPR, talking about the coincidence of these whistleblowers dying after some time (conspiracy theory). The main focus in the article was Joshua Dean, who filed a lawsuit to Spirit for concealing a defect that he found (mis-drilled hole that controls the air pressure). Almost two years later, Dean is found in a critical condition with influenza B and pneumonia, a condition so bad that the doctor had never seen before. His mother questions if someone else did this to him, considering the fact that he had no prior trouble with health. This especially raises concern because this is the second case of the year, where a previously-a-whistleblower is found dead. The first one was John Barnett, who appeared to have died of a self-inflicted gunshot wound. During the time he was testifying in his retaliation lawsuit against Boeing. Considering the fact that a plane, that carries hundreds of lives had multiple incidences with quality issues, makes this conspiracy theory convincing.
I have to disagree about the idea that this story is about politics. Really it is about the workers and the company. Boeing is a huge corporation that has historically been successful (albeit the recent failures have tarnished that) and as such the workers definitely should've received a raise in pay over the last decade. While I do see the faint hints of politics in terms of union protection, the fact is many large scale corporations now have these large unions to defend their rights so Boeing should be prepared to negotiate more and deal with the strike head on.
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