Boeing and its warring union of machinists are planning to get back to the negotiation table over the weekend and reattempt to end a strike that has lasted a little over a month, impacting production at most of the aircraft manufacturer's plans, including the already delayed 787 Dreamliner.
In a statement, Boeing's chief negotiator Doug Kight said that the company has chosen to keep its communication lines open, and has also agreed to ''pursue additional talks through the federal mediator." He said that any agreement ''must allow us to remain competitive and provide the flexibility to manage our business."
Boeing had offered an 11 per cent hike over three years, while rejecting what the union considers a core issue, the use of outside contractors. The 27,000 strong International Association of Machinists and Aerospace Workers thereafter struck work on 6 September, demanding a larger share of Boeing's record profits, and limits on the amount of work that can be outsourced or offshored.
The union still maintains its position on the outsourcing or job security issue, hoping that the indication of returning to the negotiation table from Boeing's side would mean that the company is willing to consider the Union's viewpoint on the outsourcing issue.
A few days after the strike began, while speaking to a Morgan Stanley investors conference, CFO James Bell said Boeing and IAM were "sort of in a cooling-off period." The two sides were in intensive talks last week but failed to prevent an industrial action from taking place. Bell also conceded that a major issue between the two sides was outsourcing of manufacturing work.
Boeing has developed a global supply chain for building the futuristic 787 Dreamliner and the union is concerned that more work will gradually be sourced away from the company's main production plants near Seattle. According to Bell, the union "would like all of the work to be done in the Puget Sound area and that's not realistic." The company, he explained, would like "complete flexibility" to outsource work to suppliers; "We have to figure out what's the right balance." He clarified that outsourcing wasn't the only issue separating the two sides and the gap needed to be closed on "several" issues.
Analysts had at the time estimated that if the strike lasts a month, losses could be to the tune of $2.8 billion in terms of lost revenues, and Boeing's earnings would be eroded by as much as 31 cents a share.
The union is looking for assurances for its members that they would be the ones to deliver materials within Boeing factories, along with other assurances that Boeing will not lay off any unionised maintenance workers if there are outside electricians, plumbers and carpenters working on Boeing properties.
It also wants more chances to bid on jobs that Boeing is considering filling with outside vendors.
The strike has impacted Boeing's plan to wrest the No. 1 slot from rival Airbus SAS, and has further delayed its 787 Dreamliner, which was already was postponed by at least 15 months. The plane would have entered service sometime in the third quarter of 2009. Boeing had stepped up production to around 40 planes a month to meet demand from airlines who are looking at the Dreamliner as a viable option that use less fuel.
Analysts are now saying that a seven-week strike could cost Boeing almost $1.75 billion in lost revenue in the fourth quarter, and would shave off 13 per cent off its annual earnings, to $5.10 a share.
Boeing delivered 325 aircraft through September, against its target of 480 this year. Airbus delivered 349 planes in the same period.
Now, Boeing is also facing an additional threat of a walkout by its 21,000 engineers, who like the machinists have listed outsourcing as a chief complaint. Chief negotiator Kight seems to have his hands full, also being in charge of negotiations with the Society of Professional Engineering Employees in Aerospace.