1 week Ago By LAUREN ROSENBLATT The Seattle Times
Boeing’s 33,000 Machinists union members went back at work Tuesday, restarting production at the company’s largest commercial airplane factories after an eight-week strike left the plants sitting idle. The strike strained finances for Boeing, its workforce, aerospace suppliers and businesses surrounding the quieted factories, but it ended before the financial toll became devastating, according to analysts and local economists. Machinists lost paychecks and health insurance benefits but are returning to work with a guaranteed wage hike and an extra one-time ratification bonus.
Boeing risked a credit rating downgrade and further production delays, but analysts appear optimistic the company can successfully move forward if it ramps up production efficiently. Aerospace suppliers on hold while Boeing’s Renton and Everett, Washington, factories sat idle may face the worst damage, as their workers return without the perks of a new contract. The strike, which began Sept.
13, ended last week when 59% of ballots cast supported the new contract. Machinists secured a 38% general wage increase over the next four years and a $12,000 ratification bonus. At 53 days, the strike was slightly shorter than the last work stoppage at Boeing, which lasted 57 days in 2008.
Workers lost an average of $10,400 in wages after 50 days on strike, according to an analysis from the investment banking company Jefferies. But, some workers could see a $9,900 gain in the first year of the contract. And, workers can choose how to split the $12,000 ratification bonus between their paycheck and contributions to a 401(k) retirement plan.
The Seattle metro area economy lost $318 million from the start of the strike in September to Nov. 1, four days before the strike ended, according to consulting firm Anderson Economic Group. The strike “could have taken some people out of business if it lasted long enough,” said Joseph Phillips, an economics professor at Seattle University.
“But, fortunately, I don’t think that’s going to be the case here.” While workers and local economies have likely weathered the worst of the strike, Boeing still has the difficult task of ramping up production to secure its financial footing. The amount of damage done to the company will depend on Boeing’s ability to move forward efficiently, while repairing the relationship between management and the workforce tasked with building the planes it sells, a deep wound that led to the eight-week strike it just endured.
“Getting the strike settled is step No. 1,” Phillips said. “The big step is really healing the rift between management and labor.
It just can’t be a successful company when you have such an angry workforce.” Working through the ramp up Boeing’s last Machinists strike in 2008 came at the cusp of the nation’s financial crisis. This time, the strike came after a year of Boeing’s own crises, starting in January when a panel blew off a 737 Max 9 plane midflight, leaving a gaping hole in the side of the aircraft.
Boeing has faced heightened regulatory scrutiny since then, with the Federal Aviation Administration capping production of the Max plane and installing more inspectors in Boeing factories. The company faces investigations from the National Transportation Safety Board and the Department of Justice, as well as lawsuits from Boeing shareholders and passengers onboard the Alaska Airlines flight that lost the panel, known as a door plug. This summer, Boeing also pleaded guilty to criminal fraud following two deadly crashes involving 737 Max planes in 2018 and 2019.
Now, Boeing must ramp back up to pre-strike production levels. And even that severely slowed schedule is in peril. Boeing has yet to reach the FAA’s production cap of 38 737 Max planes per month.
“The baseline pre-door plug (production rate) is kind of off the table. You don’t get there for a long while,” said Ronald Epstein, an analyst with Bank of America. He estimates Boeing will feel the effects of the two month strike in to 2026.
“They don’t have a choice. They’ve got to work through it,” Epstein said, adding that new CEO Kelly Ortberg has “been pretty honest about ‘this could take time.’” Ortberg told investors on a call in October, before the strike ended, that the company had a plan in place for ramping up, but did acknowledge that it would have to ease back to work and retrain some workers.
Boeing raised $21 billion in a recent stock sale, part of an effort to avoid a credit rating downgrade as it worked to shore up its balance sheet. That influx of cash bought the company more time to ramp up production, after two months of very few deliveries. Epstein from Bank of America said Boeing can afford the costs of the new Machinists union contract, which he estimates to be about $1.
1 billion, plus or minus $100 million each year. Still, he’s keeping an eye on Boeing’s defense business, which cost the company $2 billion last quarter, and the impact of its next round of contract negotiations with its engineering workforce. Analysts from TD Cowen agreed that Boeing could afford the wage hike.
They view the impact of the strike more on the pace of production moving forward and the “peripheral impact” on suppliers. Boeing’s agreement with Machinists will serve as a “benchmark” for future negotiations, the analysts wrote, including workers at supplier Spirit AeroSystems, which Boeing is acquiring. Suppliers also felt the impact of the work stoppage, with many having had to furlough or lay off workers while Boeing’s factories sat idle.
Before the strike ended, dozens of business trade groups sent a letter to Boeing and the union urging a quick resolution because, the letter read, “countless companies in the aerospace supply chain” felt the impact of fewer work orders. Now, those suppliers are working to come back online just as Boeing is. The economic impact The eight-week strike became the most costly work stoppage in recent U.
S. history, said Patrick Anderson, founder of the Anderson Economic Group. It surpassed two strikes by members of the United Auto Workers Union in 2019 and 2023, as well the three-day dock workers strike earlier this year.
It was so costly because of how long it lasted, Boeing’s status as a major exporter and the negative impact on other aerospace suppliers around the country, Anderson said. Boeing’s stock sale shows “it really hurt the company” and its workers, he continued. “Because aviation has such a big time frame between ordering and delivery, we won’t know if Boeing and its workers will be able to pull this out for some time,” Anderson said.
“It’s definitely been a very costly 2024.” Hart Hodges and James McCafferty, co-directors of the Center for Economic and Business Research at Western Washington University, said the impact of the strike on the local economy is more likely to come as delayed spending, rather than permanent changes to economic activity. For example, if a family put off buying a car until the strike ended, they’d likely still buy the car, meaning the money will still wind its way through the local economy, just a few months later than it may have if the strike hadn’t occurred.
“People can be on strike and not get their income for a short period of time and they maintain their spending. There’s not a lot of change we can see in the economy,” said Hodges. “But there comes a point where spending really has to get cut, or job status changes, or they have to leave the area.
I don’t know where that magic number is. ..
. I think we were probably very close,” he continued. But, he pointed to the 41% of Machinists who voted against the contract offer, indicating they were prepared to remain out of work even longer.
Now, as Machinists return to work with a bonus and a pay hike, local economists expect to see some catch-up spending but don’t anticipate it will have a huge impact on the region’s economy. Phillips, from Seattle University, said the increase in pay would be “helpful” for the region but that the national economy will play a bigger role. He pointed to the upcoming change in administration, with president-elect Donald Trump promising tariffs that would impact a state and region dependent on international trade.
Dave Reich, the executive director of the state’s Economic and Revenue Forecast Council, agreed that the salary increase would have a modest impact on the region. With 3.6 million workers across industries in Washington, Boeing Machinists make up 1% of the state’s labor force, he said.
Reich estimated that the state lost about $2 million in tax revenue per week during the strike. That loss comes from decreases in revenue from sales tax and Washington’s business and occupation tax, which taxes gross business income. Reich also factored in some “snapback” spending, after workers cash their ratification bonus.
That brought the estimate from $16 million in lost revenue during the eight week strike to $10 million. That’s not a significant amount, Reich said. The state estimates it will see $33 billion in revenue for fiscal year 2025, making a $10 million loss essentially a drop in the bucket.
Those estimates don’t include revenue loss for local governments. Workers at Boeing’s aerospace suppliers are likely to feel the most detrimental impacts of the strike, said the economists from Western Washington University. Those suppliers often had to cut or furlough workers as Boeing’s factories sat idle, but the supplier workforce is returning to work without a bonus or a pay hike to offset the weeks of lost income.
Looming layoffs Machinists are returning to the factory right as Boeing is gearing up to lay off 10% of its workforce, or 17,000 roles. The company plans to notify the first of those workers who will be let go on Wednesday, one day after the Machinists returned to work. Ortberg told investors in October the layoffs were due to overstaffing and inefficiencies in the company, rather than the financial impact of the strike and are not targeted at front-line machinists and engineers.
Still, some Machinists feel uncertain about their future at the manufacturer. Concerns that they may not have had a job to come back to if they push Boeing into too much of a financial pit drove some workers to accept the contract offer, striking workers told The Seattle Times. Machinists local union president Jon Holden told reporters after the strike vote count that layoffs impacting those workers charged with building the planes “would be very short sighted.
” “There’s 6,000 airplanes or so in backlog. They need us to build them,” he said. “It’s important to get our membership back in the factories, build the rates and start delivering airplanes.
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