2024 07 31 171925
New CEO Kelly Ortberg now seems to have resorted to the old Boeing playbook and strategies, just at the time it needs a fresh start and cultural change. Boeing pre-announced its earnings and strategic changes in a preview of the October 23rd earnings call, and Kelly Ortberg issues a memo to employees in which the company finally realizes how much trouble it is in. The problem is that the solutions he proposed, including a 10% staff cut, will most likely exacerbate, rather than provide viable solutions for the multiple problems the company faces.
Boeing’s culture drives the IAM negotiations
Ortberg struck out with his first highly visible task, reaching a deal with the IAM. Perhaps he was unaware of the militancy and anger on the shop floor, including the willingness to take a strike. After a tentative deal was reached, the rank and file voted against union leadership and rejected the deal with a 94% vote. Boeing, as is typical within the culture of arrogance, submitted a ‘best and final’ offer that circumvented union leadership and was made public to the rank and file before union leadership could advise its members. IAM leadership rejected that offer out of hand, likely because of the way it was presented, without a strike vote.
While Ortberg was not a part of the last contract, a quick review of the relationship history with the union shows a clear history of distrust and contentious relationship between the IAM and Boeing. On his first day, he visited the shop floor and promised a more open relationship and opportunities to work together as a team. The way Boeing handled the IAM negotiations have scuttled those efforts and fermented even more distrust to a contentious history.
Running up to the strike, reports of militant activity on breaks that included loud music in the factory and clear animosity regarding the last contract, should have been noticed and factored into decision-making. The ‘best and final’ offer has likely increased the length of the strike by a month and will cost the company dearly in cash flow. It will also further erode management’s credibility when they increase that offer to reach a deal – as Boeing’s ‘best and final’ will turn out to be neither their best, nor final, offer.
