One month of Boeing strike: Costing company and workers $5 billion, new analysis finds
(CNN) – This Sunday marks one month since members of the International Association of Machinists (IAM) went on strike against Boeing. Cost: nearly $5 billion, according to a new analysis from Anderson Economic Group shared exclusively with CNN.
The multimillion-dollar bill underscores the challenges facing the plane maker once synonymous with American quality. Instead, it has faced a series of bad news in recent years, from fatal accidents to increased regulatory scrutiny and a strike of 33,000 workers that began on September 13 and effectively paralyzed work.
Boeing workers and shareholders account for most of the strike’s losses, at $3.7 billion, according to a new analysis. No aircraft have been built at the Everett, Washington plant since IAM members walked off the job, prompting the company’s first strike in 16 years.
“Boeing’s suppliers, Seattle companies and customers pay a portion of the price,” said Patrick Anderson, CEO of Anderson Economic Group. “Our weekly estimates now include significantly larger losses for other businesses in the Seattle area, as well as losses for customers who rely on Boeing service and parts.”
Boeing suppliers suffered losses of $900 million in the first four weeks, while non-Boeing workers in Seattle affected by the strike suffered losses of $102 million. Boeing’s airline customers are also suffering the financial impact, with losses totaling $285 million for Boeing customers worldwide.
“Costs for Boeing and its shareholders increase as the company depletes its liquidity and may have to borrow or issue shares to maintain its operations during the strike and, what may be difficult, to recover,” Anderson said.
Boeing announced Friday that it would lay off 10% of its workforce — about 17,000 employees — in the coming months.
“Our business is in a challenging position, and it is difficult to overstate the challenges we face together,” Boeing CEO Kelly Ortberg said in an email to employees Friday.
Before Ortberg took over as CEO in August, Boeing pleaded guilty to defrauding the Federal Aviation Administration (FAA) after it failed to disclose a system update to its 737 Max fleet that resulted in a design defect that caused… for which two 737 Max aircraft went out of service. crash, one in 2018, another in 2019. The settlement with the Justice Department resulted in nearly $1 billion in fines for the company. The judge reviews the agreement.
Negotiations between Boeing and striking IAM workers broke down last week after two days of negotiations brokered by the federal government. “Unfortunately, the union did not seriously consider our proposals,” Stephanie Pope, president and CEO of Boeing’s commercial aircraft division, said in a memo to employees Monday. Pope called the union’s demands “non-negotiable.”
Even though the two sides are far apart on nearly every issue, John Holden, president of IAM District 751, told CNN on Thursday that “there needs to be an agreement.”
“I don’t know what the final outcome will be, but there are a lot of questions on the table,” Holden told CNN. “You’re going to have to negotiate and come to an agreement, and they’d better spend their time at the negotiating table to work this out.”
Holden says he has great confidence in the strength of the strike fund – money paid to members each week they go on strike – to support members for as long as necessary to reach a “reasonable” agreement. But he is aware of the impact it will have on the economy.
“This will affect the GDP for the year. This will impact the aerospace supply chain and manufacturing in the future. The more time passes, the more difficult it will be to resume production and return to rhythm,” he said.