Boeing strike costs set to soar if labor dispute drags on

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Boeing’s rough year got even worse last week when some 33,000 of its unionized workers went on strike, and the work stoppage is expected to cost the beleaguered aerospace company dearly if it extends for too long.

Since Boeing workers represented by the International Association of Machinists and Aerospace Workers’ Union (IAM) walked off the job last Friday, the workers and the company’s shareholders have lost at least a combined $571 million, according to an analysis by Anderson Economic Group (AEG) – and the damages will only escalate as the strike drags on.

Labor expert Jason Greer, founder of Greer Consulting, told FOX Business the strike will likely last another two to four weeks, but there are signs that it could extend beyond that timeframe.

“The striking employees are of the mindset that Boeing will have no choice but to give in to their demands considering how much money Boeing has already lost, in addition to how much they stand to lose the longer the strike lasts,” he said. 

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Greer said the prevailing question for Boeing is how long the company can withstand the strike. 

“Boeing’s decision to furlough non-union workers as well as reduce executive pay in an effort to reduce costs is a direct sign of an organization that’s prepared itself for the possibility of a long strike action,” he said.

Boeing picket sign before the Boeing sign

Ticker Security Last Change Change %
BA THE BOEING CO. 154.64 -0.57 -0.37%

Patrick Anderson, AEG’s principal and CEO, told FOX Business in an interview that when determining their short-term estimates of losses during a strike, his firm makes the presumption that companies can return to business as usual after a work stoppage without any substantial changes in production. 

However, the longer strikes go, the weaker that presumption becomes, he said.

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Anderson noted that roughly four weeks into the United Auto Workers (UAW) strike against General Motors, Ford and Stellantis last year, AEG warned that a continuation of a militant strike would likely result in the loss of production facilities. That came true, he said, as evidenced by the ongoing tension over Stellantis’ currently shuttered Belvidere, Illinois, plant and the automaker’s plans to move some production outside the U.S.

Boeing workers on strike

If the Boeing strike goes on for too long, it could begin impacting productivity, and that would send costs for the company soaring.

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“Boeing is effectively in a duopoly with Airbus on much of the commercial airline industry,” Anderson said. “They’re insulated, to some extent, but no company is completely insulated from failing to produce their product on time, failing to produce a high quality product and increasing the cost. So, Boeing is a company on the precipice. It is vulnerable.”

He added, “This is an icon of American manufacturing that has taken multiple body blows, and now it’s facing this serious strike.”

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