But That Delay Could Help One Troubled Program
As workers represented by the International Association of
Machinists began their first week walking the picket lines outside
Boeing plants in Washington, Oregon and Kansas, analysts and
industry pundits seem to agree the walkout will last at least a
month... but after that, it's anybody's guess.
If history is a guide, the strike won't last much longer than a
couple of months. Bloomberg reports IAM has walked out over three
of its last six contracts with Boeing, ranging from 28 to 68
days.
"I would expect this one's going to be long," said longtime
Seattle-based aviation consultant Scott Hamilton. "There are some
pretty serious issues that they're pretty far apart on."
As ANN reported, Boeing offered machinists an
11 percent raise over three years, as well as bonuses and a
double-digit percent gain in pension payments. Union workers wanted
a 13 percentage raise, and concessions from Boeing involving limits
to outsourced manufacturing. The IAM also called for a stronger
health plan, and guarantees from the planemaker that new hires
would receive similar benefits to their more tenured
counterparts.
IAM workers overwhelmingly rejected the Boeing contract last
week... and both sides have adopted a harsh line. On the
surface it appears Boeing and IAM are indeed far apart on several
issues; how much of that is substantive, though, remains to be
seen... and time may be the only force able to cut through the
bombast.
"It's hard to tell what's posturing and what's an unbridgeable
gap," said noted Teal Group analyst Richard Aboulafia. "In a few
weeks, cooler heads might begin to reassess," though he also
acknowledged the latest strike "seems a little worse than
most."
Boeing appears well-positioned to weather the storm in the
short-term. The company has healthy cash reserves, stemming from
three consecutive years of record sales and healthy delivery
backlogs. Conversely, Boeing isn't able to collect full payment on
its planes until they're delivered... and with lines shut down for
the foreseeable future, few deliveries are imminent.
Analysts say Boeing's inability to deliver aircraft adds up to
about $100 million in losses for each day the strike wears on. A
significant chunk of that total comes from lost revenue, though
much of it also comes from running idle plants and continuing to
pay non-IAM workers.
If there's one bright side for Boeing, however, it is that the
planemaker will not need to compensate customers for additional
delays caused by the strike. Such provisions are common in
airliner purchase agreements... and for one Boeing program, it
could be a blessing in disguise.
The longer the strike wears on, the better the chances Boeing
will be forced to once again delay deliveries of its troubled
Boeing 787 Dreamliner. Unless the strike is resolved this week, it
already seems likely the first 787 flight -- currently scheduled
for November -- will be pushed off until after the first of the
year.
While such a delay would be yet another black mark for the
troubled composite-bodied airliner, the strike also gives Boeing
some additional breathing room in allowing its suppliers to catch
up on parts deliveries... essentially free time at that, since
Boeing wouldn't have to pay eager customers additional concessions
for missed deadlines.
Machinists maintain that if Boeing hadn't outsourced production
of so many components of the 787, however, the company wouldn't
need to now weigh out the pro's and con's of such a scenario in the
first place.
"It was a major mistake for the company to fall so far behind on
this program," striking machinist Dewayne Roberts said of the 787,
to the Seattle Post-Intelligencer. "If we had built it, the 787
would be flying by now."