Continuing Strike Grounds Boeing ProfitsOctober 24, 2008
The negotiations between Boeing and the International Association of Machinists and Aerospace Workers has been on-again, off-again for nearly two months since 27,000 Boeing machinists walked off the job. As a result, the company shuttered its commercial aircraft factories in the states of Washington, Oregon and Kansas. Analysts estimate that the strike is costing Boeing a whopping $100 million a day as its backlog of orders grows bigger. The company reported yesterday that it delivered only 84 planes this quarter. But if workers had not been striking, it would have delivered 119. During an earnings conference call on October 22, Boeing chairman and chief executive Jim McNerney said the company has continued to take new orders — with its commercial airplanes backlog growing to $276 billion. During the call, he said the "linchpin” of the unresolved issues related to management rights and outsourcing. "From the company's standpoint, the turmoil in the financial markets provides a timely reminder of why it would be unwise for us to agree to terms in any contract that would restrict our ability to manage our business and respond quickly to market dynamics and global customer needs," he said. “…Many companies have learned the hard way [that] jobs in today's global economy are created and sustained only through productivity improvements and customer-focused innovation." Both sides are feeling the pressure to settle quickly Boeing is being pushed by its suppliers and customers to restart its factories while union leaders are beginning to feel the wrath of some of their members who want to get back to work. McNerney is optimistic that the dispute will be resolved with the help of federal-mediated discussions, which started on October 23. While he declined to predict success or failure, he said both sides are approaching the situation with a "constructive headset." |
Boeing, the world's second-largest commercial aircraft maker, reported on October 22 that its third-quarter profit fell 38%. The company, based in Seattle, blamed its dismal numbers on the global financial turmoil and more specifically on a strike that has brought many of its factories to a grinding halt since September 6.
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