x Abu Dhabi, UAEThursday 27 July 2017

Boeing faces turbulence as major strike looms over workers' benefits

Boeing risks being brought down to earth with a bump by engineers fed up with the company's stance over benefits.

A giant of the aviation industry risks being brought down to earth with a bump by engineers fed up with the company's stance over benefits.

Boeing, already struggling with the grounding of its 787 Dreamliner, is facing a possible strike by union engineers, threatening even more upheaval as it tries to fix the plane and resume deliveries to customers.

Voting was due to end early this morning UAE time for 23,000 engineers and technical workers considering whether to authorise a walkout in their dispute over retirement benefits.

Approval would allow the Seattle-based union to call a strike at any time.

Labour strife may undermine the company's efforts to recover. Union workers are involved in trying to find the source of two battery failures that prompted the 787's January 16 grounding and potential solutions that could get the plane back in the air. They're also helping boost jet production to pare a seven-year order backlog and develop upgrades for three models.

"The timing would just be horrible," said Brad Lawrence, the chief executive of Esterline Technologies.

"To have your engineers' union be this disconnected that it would walk out right when your company needs you most, it would just be horrible."

The clash reflects long-standing differences between the engineers who design Boeing planes and the managers at the helm of the company.

Negotiations on the latest contract turned bitter in recent months. Boeing said work would move to less expensive sites outside its Seattle jet-manufacturing and development hub if labour costs kept rising. The company said it was facing increased competition and needed to pare its growing pension liability so it can invest in new models.

The Society of Professional Engineering Employees in Aerospace union, or Speea, cites Boeing's US$12.6 billion (Dh46.28bn) in profits since 2009. It says engineers deserve to be rewarded as the company has returned cash to shareholders with buy-backs and a 15 per cent dividend boost in that time period.

"It's too close to call," said Richard Aboulafia, a consultant with Teal Group in Fairfax, Virginia.

"I've never seen any labour dispute in aerospace with this degree of uncertainty."

The 787 battery issues and labour strife show an erosion of that traditional strength, said Wolfgang Demisch, a retired aerospace financial consultant. Company and government investigators still have not found the reasons behind last month's battery failures that caused a fire in one 787 at an airport and forced an emergency landing by another.

"The overall performance is just inadequate, and that's not world-class engineering, which is what Boeing is known for," Demisch said.

"Boeing is heading toward a possible strike of its engineers. That's suggestive that Boeing's employee relations also need a re-engineering."

 

* with Bloomberg News