Boeing Faces Long Strike as Gig Economy Gives Workers Clout

(Bloomberg) — Around Boeing Co.’s vast aircraft manufacturing hub in Seattle, the great belt tightening has begun as the planemaker and its factory workers settle in for a labor dispute that will test the resolve of both sides.

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Striking employees received their final Boeing paycheck on Thursday, and the company stops paying for their health insurance on Sept. 30. Both measures will pinch household finances, typically ratcheting up the pressure and stakes for union negotiators to reach an agreement on a new contract.

But as workers stare down the embattled manufacturer for better pay and benefits, the 33,000 members of IAM District 751 have the full benefit of a tight labor market and gig economy that provides a quick transition into jobs that help make ends meet. That gives the union bargaining leverage, potentially frustrating Boeing’s effort to swiftly end a conflict that’s costing it an estimated $100 million each day.

While the battle between one of the world’s largest exporters and its blue-collar workers may look like an uneven fight on its surface, Boeing finds itself in an increasingly untenable situation with its finances so dire that it can ill afford a drawn-out paralysis.

“I think everybody is ready for the long haul,” said Christopher Dahl, 38, who has worked at Boeing for 10 years, now testing flight-control systems. “I’ve gone through every strike because my parents were Boeing employees, so I know the game. And before, there wasn’t the options like we have to make money on the side.”

Companies like food-delivery provider DoorDash Inc. or Uber Technologies Inc. weren’t around 16 years ago, when Boeing’s largest union last walked off the job, shutting down its commercial airplane manufacturing for two months. Now, such companies, alongside a still-tight labor market, are providing possible options to sustain the strike.

Workers are once again digging in for a holdout after bucking their union leadership by voting overwhelmingly to reject a 25% pay raise. On picket lines outside the Renton factory where Boeing builds 737 Max jets, employees said they’ve been saving for years to strike for as long as it takes — without pay, aside from $250 weekly deposits from the IAM local.

Contract talks are at a stalemate, with no new sessions scheduled after two days of federal mediation. Updates from IAM District 751 earlier in the week showed union leaders drawing a hard line around 40% pay raises and reinstating pensions.

“With a 96% strike vote, we thought Boeing would finally understand that IAM 751 Machinists are demanding more,” the union said in a scathing update posted after the initial day of talks on Sept. 17.

With Washington state’s unemployment rate running at 4.9%, it’s easy to pick up temporary work in construction or driving for Amazon.com Inc. Across the street from the Boeing gate where union members were grilling hot dogs and waving at cars honking in support, Topgolf Callaway Brands Corp. prominently posted a sign saying “Now Hiring.”

“There’s so many jobs all over the place,” said Luis Arteaga, 54, who’s been at Boeing for 18 years. “Red Robin is hiring, LA Fitness, any restaurant is hiring, FedEx, UPS — I mean, every place is hiring. ”

Arteaga said he started planning his finances for this strike at least two years ago, and could easily last as long as three months without a regular Boeing paycheck, especially if he picks up a side job.

Others on the 24-hour picket lines estimated they could hold out until Christmas. Carmen Kim, who was striking with her husband — like her a Boeing employee — is prepared to get by for an entire year without regular work.

Boeing, meanwhile, is launching into a broad set of cost cuts to conserve cash. The austerity measures include unpaid leave for tens of thousands of US workers, and a cutback in travel that requires senior executives to fly in economy cabin seats. The planemaker is even contemplating selling equity to supplement its rapidly dwindling cash and maintain its investment-grade credit rating.

“We remain committed to resetting our relationship with our represented employees and continuing discussions with the union to reach a new agreement that is good for all of our teammates and our company as soon as possible,” Kelly Ortberg, Boeing’s new chief executive officer, told employees in a memo.

The labor strife at Boeing is remarkable for themes that resonate across other American companies: lost pensions and frustration over stagnating wages that haven’t kept pace with inflation, said Brian Bryant, international president of the International Association of Machinists and Aerospace Workers.

“The entire labor movement is watching this closely,” Bryant said in an interview. “This isn’t just a Boeing issue. Workers in this country have been left behind. There’s a movement here. Workers have said enough is enough.”

The Biden Administration has been monitoring the strike as well, said Bryant, whose union represents almost 700,000 members across North America.

“They’ve reached out to see what the status is, what support they can give, anything they can do to get the parties back together,” he added.

Many machinists interviewed by Bloomberg News cited a strong sense of injustice over what they perceived as union-busting tactics in the wake of the 2008 strike. Among them, Boeing started a second assembly line for the 787 Dreamliner in South Carolina, eroding its Seattle manufacturing base.

“While new CEO Kelly Ortberg has taken a more conciliatory approach, there is 16 years of history pitched against him,” said Rob Stallard, an analyst at Vertical Research Partners, adding that “the gap between what the IAM union members want and what Boeing is currently offering is large.”

A controversial 2014 contract extension looms particularly large. IAM members were pressured into a long-term deal that froze their pensions, increased health care premiums and locked in modest pay increases in order to keep manufacturing of the 777X jet in the Seattle area. It’s the deal that expired on Sept. 12.

“For 10 years, the union had no room to maneuver and lost all their leverage,” said Leon Grunberg, a sociology professor emeritus at the University of Puget Sound. “That may be contributing to the sense of payback or retribution.”

Boeing can’t resort to the same playbook in these talks. It doesn’t have a new jet development program in the pipeline after five years of heavy financial losses. It also can’t shift more manufacturing to the Southeastern US, since unemployment is still hovering near record-low rates in that region.

In fact, striking Boeing workers say they are getting many online help-wanted ads from Airbus SE, the company’s European rival, along with rocket maker Blue Origin LLC. Both have manufacturing plants in Alabama, where unemployment stood at 2.8% in July.

Bruce McFarland, an instrumentation technician at Boeing and IAM officer, pointed to another change that’s transformed the union from the past strikes: The spread of social media accounts that allow union members to stay connected and keep morale high over what could be months without work.

While it’s early days, many of his colleagues are driven by an idealistic goal as well as pocketbook concerns, he said. They want a fair contract, but they’d also to rebuild Boeing’s culture so workers are treated with dignity.

“I love my job, I love the work,” McFarland said. “Sometimes you have to wonder what the company’s doing.”

–With assistance from Eric Johnson.

(Updates with details of negotiation stalemate in eighth paragraph.)