Boeing HQ
Today’s news focuses on a “best and final” offer from Boeing to end the Machinists strike. That offer includes a 30% wage increase rather than 25%, restores an annual bonus that typically has been about 4% of annual wages that was removed from the prior offer, and doubles the signing bonus for the contract to $6,000 per employee. The IAM union is required to put this offer up to a vote, so once again the decision falls to the rank and file employees.
Given the militancy of the employee group prior to the strike and the massive rejection of the prior offer, ratification of a “best and final” offer is by no means certain. Union employees may be encouraged by how quickly Boeing increased its offer, and be emboldened by understanding how critical having a short strike, with employees returning to work quickly, is to Boeing. After a history of Boeing winning the bulk of recent negotiations, there may be an appetite to turn the tables. Stay tuned.
In the interim, the Boeing strike is so large that it could negatively impact Federal jobs reporting, with 33,000 employees on strike and perhaps 20,000 more impacted by the strike, a move of 50,000 employees in a month can skew the jobs report.
In other news, Boeing has conducted a first flight of the first British Wedgetail early warning aircraft, based on the last generation 737-800 NG rather than the MAX. Production of these aircraft will be impacted by the strike in Renton.
The SpaceX choice to retrieve the stranded astronauts underscores their lead in the commercial space industry over Boeing. Last week’s private spacewalk and highest mission since the Apollo programs indicates the success SpaceX has achieved and their significant lead over Boeing in both the number of launches and successful manned missions to the International Space Station. SpaceX is focus on Mars as its next destination, while Boeing remains still trying to quality as a commercial transport to the ISS.
Was the Starliner a contributing factor to the departure of the Defense, Space and Security unit’s leader, Ted Colbert III, last week. We believe something that embarrassing for Boeing needed an appropriate corrective response, and was perhaps the straw that broke the camel’s back. While the Starliner did end up working as expected, a vindication for Boeing, the uncertainty and the customer’s lack of confidence in Boeing hurt.
Finally, the FAA will vow to keep Boeing accountable and revamp the agency’s safety program. Written testimony in advance of congressional testimony by FAA Administrator Mike Whittaker indicates that “Boeing must make significant changes to transform its quality system and ensure the right layers of safety are in place.” That doesn’t sound as if the FAA will increase the maximum production rate for the MAX beyond 38 per month anytime soon. While Boeing has not yet reached those rates, their plans to move beyond 42 per month in 2025 will likely not materialize on time to drive additional cash generation. Whittaker will appear Tuesday and Wednesday on Capitol Hill in separate FAA and Boeing hearings.
Links to todays key news items follow:
- Boeing raises its offer to Machinists to try to end the strike – Seattle Times
- The Boeing strike is so big it could dent the jobs report – Quartz
- Boeing completes maiden flight of future British Wedgetail early warning aircraft – Defense Post
- SpaceX launch to retrieve NASA astronauts highlights growing lead over Boeing in commercial space industry – Yahoo
- FAA vows to keep Boeing accountable, revamp agency safety program – Reuters
