Boeing Strike: No End in Sight

Machinists face a loss of health coverage after three weeks, but anger over Boeing's power to outsource work may keep the strike going

By Joseph Weber

Boeing machinist Michael Glover mans the picket line outside Boeing's plant Sept. 6, 2008 in Everett, Washington Robert Giroux/Getty Images

As the strike by 27,000 machinists at Boeing (BA) is poised to move into a second week, labor and management seem as far apart as ever. Estimates for how long the impasse will linger range from about three weeks, which would mark the time when health insurance coverage lapses for the strikers, to until a couple of weeks before Thanksgiving, when prospects for a lean Christmas begin to weigh heavily on both sides.

For now, both managers and union officials say, no talks are scheduled. Each is waiting for a call from the other and a federal mediator.

Just how Boeing and its workers went off the cliff (BusinessWeek.com, 9/5/08), yet again, may be an object lesson in how tough it can be to bridge the gap between labor and management in a globally competitive, old-line business. If Chief Executive W. James McNerney Jr. wanted to use this go-round to break a nearly 60-year cycle of acrimonious relations between Boeing and the International Association of Machinists & Aerospace Workers (IAM), he certainly hasn't succeeded. And if the IAM leaders figured this was the time when they could humble management and right the wrongs they felt done to them in prior contracts, they seem to have badly misjudged the determination of the CEO and his managers.

A Different Tone?

Certainly, McNerney & Co. sought to set a different tone from 2005, when the IAM last went on strike. Then, the machinists shut down commercial planemaking at Boeing for 28 days. This time a fresh team of Boeing negotiators, trying to iron out differences well in advance, began last May to sound out the union leadership on what contract terms might fly and what would be dead on arrival. The effort was part of a drive to "listen very carefully to our employees," chief management negotiator Doug Kight said. The company, he argued, wanted to share its success with the workers even while making sure it could stay competitive.

In a May memo, Kight said the early talks were a chance "to have open and respectful conversations."

For the union leaders, however, the early start did little more than raise suspicions. Boeing, they figured, just wanted more time to sell its least palatable plans to the workers. Among them: proposals to eliminate medical benefits for some retirees and to kill off a traditional pension program for new hires while giving them a 401(k)-like retirement plan instead. Though skeptical, union chief negotiator Mark Blondin went along with the early start to talks. Now, he says, "I sensed a PR thing coming, and sure enough that's what happened."

Just how much listening really took place is far from clear. By July, the union leaders didn't think they were making much headway. The proposed "givebacks" on medical and pension benefits, which the union leaders had warned were sure strike-starters, remained on the table. So the leaders told their members to start saving for another strike, which would be the seventh launched by the IAM against Boeing since World War II. Sure that a walkout was inevitable, some longtime workers canceled summer vacations and set aside enough cash so they could get by on the $150 a week in strike benefits.

False Start

Despite the early start, no real movement took place until the end of August. With a Sept. 3 strike vote looming, management caved in on the plan to end medical benefits for some retirees. They decided to stick with traditional pensions (BusinessWeek.com, 8/27/08), even hiking the amounts the company would contribute. Kight and his team made a best-and-final offer on the Thursday before Labor Day, offering raises of 5% in the first year of a new contract and 3% each for the two years afterward.