According to a report by Dow Jones, the Boeing Company has lost a projected $1.4 billion or more in sales as of last Friday, on account of a strike by 27,000 machinists protesting Boeing's contract offer, with their core disagreement with the aircraft company hinging around the company's plans to shift more jobs to non-union and foreign companies.
Boeing argues that it needs to be allowed to outsource in order to ensure future sales, especially sales to overseas clients who account for almost 90 per cent of its current backlog. Meanwhile, the strike has entered its third week.
All of Boeing's commercial plane production is off directly impacting delivery to airlines, shipping and leasing customers, and delaying the rollout of its 787 Dreamliner even further. Senior Boeing officials had conceded that the ongoing strike by the International Association of Machinists and Aerospace Workers means "at least a one-month delay" in the 787 programme, at the beginning of the strike.
The company also faces fines from customers over late deliveries.
At the start of the strike, it was estimated that it is likely to cost the US aerospace giant $100 million a day in lost revenue. Boeing's production lines for its 737, 747 and 777 family of aircraft have come to a halt even it, one of the world's biggest manufacturer of commercial aircraft, struggles to meet a record backlog of orders worth $275 billion.
A week ago, Continental Airlines said Boeing was in part responsible for a $100 million shortfall in its end-of-the-quarter cash balance outlook, and said that it was expecting deliveries of new aircraft next month.
Boeing's 2002 contract with the IAM has language in it that allowed Boeing to use external companies or subcontractors to farm out work typically done by the machinists, most of whom are IAM members. The company used those clauses to its advantage in order to expand its supplier base for its latest, much awaited plane, the 787 Dreamliner.
The 787 Dreamliner is seeing components from suppliers around the world, and is only being assembled in Everett. The IAM says Boeing has rid 16,000 IAM members of jobs since 1990 on account of the progressive increases in outsourcing.
Since parts of the Dreamliner are coming in from across the globe, the impact of the strike at Boeing too would trickle down to supplier companies, who would have to deal with higher inventories at Asian and European suppliers plants where most of the main body of the 787 is being sourced from. Japanese engineering giants Mitsubishi Heavy Industries, Kawasaki Heavy Industries and Fuji Heavy Industries are sure to be impacted, as they have helped develop the new carbon-fibre fuselage and wing structures for the Dreamliner.
The US aerospace industry accounts for around one per cent of the nation's $14 trillion gross domestic production, counting in around 200,000 jobs.
Amongst companies impacted by the strike are Hexcel Corporation, Rockwell Collins, Honeywell International, and LMI Aerospace.