On October 14, acting Labor Secretary Julie Su made her first personal intervention in the labor negotiations deadlock between Boeing and the International Association of Machinists and Aerospace Workers (IAM) during her visit to Seattle. This visit comes as the strike at Boeing marks its one-month anniversary, putting significant pressure on CEO Kelly Ortberg.
According to Reuters, the Labor Department confirmed that Su’s involvement follows Boeing’s announcement on October 11 that it would lay off around 10% of its global workforce, translating to approximately 17,000 jobs.
A Labor Department spokesperson stated, “Acting Secretary Su will meet with representatives from both sides at Boeing on the 14th to assess the situation and encourage progress in their negotiations.”
The spokesperson further noted that while Su had previously spoken with both parties regarding the labor dispute, this marks her first in-person meeting with them in Seattle.
Since September 13, approximately 33,000 IAM workers have been striking, demanding a 40% wage increase and the reinstatement of their defined-benefit pension plan that they had agreed to forgo in 2014.
On this day, Boeing’s stock fell by 1.3%, closing at $148.99. Additionally, Boeing announced on the 11th that the delivery of its 777X jetliner would be delayed, and production of the 767 freighter would cease.
Industry insiders revealed that Boeing plans to hold a meeting this week to outline further details following the announcement on the 11th.
Sources indicate that on November 15, Boeing will notify thousands of employees in its commercial aviation division of a 60-day notice, meaning that those receiving the notice would be laid off by mid-January. If further layoffs are necessary, a second round of notices is expected to be issued in December.
The IAM strike has now entered its fifth week, exacerbating Boeing’s internal cost pressures and tensions with labor, adding to the significant stress on CEO Ortberg, who took the helm at Boeing this summer. S&P Global Ratings estimates that the strike costs Boeing over $100 million each month.
This strike follows a tumultuous year for Boeing. Earlier this year, an embedded cabin door on an Alaska Airlines Boeing 737 MAX 9 fell off mid-flight, forcing an emergency landing. This comes in the wake of two fatal crashes involving the MAX model six years ago, which put Boeing in a challenging position.
The strike has halted operations at Boeing’s factories in Seattle and other locations, leading to decreased cash flow for the company. Boeing withdrew a rejected contract proposal last week, claiming that its terms had not been negotiated.
Harry Katz, a professor specializing in collective bargaining at Cornell University’s School of Industrial and Labor Relations, commented, “Boeing has to improve wage offers, no doubt about it,” but he noted that the IAM’s demands for the restoration of the pension plan are unlikely to be realized. He estimates that the strike could last an additional two to five weeks.