Boeing in trouble: NHK reports on the continued strike
– Labor union strike to hit business partners directly
– What are the deep-rooted issues facing Boeing?
We bring you a summary from the NHK broadcast article.
Quarterly financial results for September 2024:
American aircraft manufacturer Boeing is in trouble.
The company posted a final deficit of 940 billion yen, the ninth consecutive quarterly deficit.
1. The labor union strike that began in mid-September has exacerbated the deterioration of business performance.
2. The company’s proposal to raise wages was rejected twice by union members in a vote.
There are concerns about the impact on many business partners, including Japanese companies.
Background of the Boeing strike:
The interview took place in Everett, Boeing’s main factory, on the outskirts of Seattle.
NHK’s interview revealed Boeing’s deep-rooted management issues.
Employee protests:
On September 13, the Boeing labor union went on strike.
1. On October 21, employees held up placards around the factory.
2. Protests against Boeing continued around the clock.
The union is unhappy with the wage increase:
In early September, management and union officials reached a tentative agreement on a 25% wage increase over four years.
1. However, the union had originally wanted a 40% wage increase.
2. The union resisted the tentative agreement, and it was rejected by 94% of voters.
The U.S. government mediated the strike:
In mid-October, the company presented the union with a new wage increase proposal.
1. In the latest proposal, the wage increase would be increased to 35% over four years.
2. The bonuses that were abolished in the initial proposal would also be reinstated.
Union members struggling to make ends meet: Chaz Barnfather (33)
Less than one in ten people said they supported the company’s proposal.
Union members receive $250 a week in living support.
However, it is difficult to make ends meet with that alone.
1. After the strike began, he started working part-time at a restaurant.
2. He works five days a week as a cook, and uses the money to pay rent and living expenses.
Boeing union members criticize:
Paying former CEO David Calhoun a high salary is a big mistake.
Why pay the former CEO $33 million but not pay the employees?
Strike hits business partners:
Pathfinder Manufacturing:
This company’s sales come from business with Boeing, which accounts for 95% of its sales.
They handle 1,200 types of parts for the 777 and 767 aircraft.
1. However, parts were waiting to be shipped, and inventory piled up.
2. The company’s sales dropped significantly after the strike began.
Major employee cuts: CEO David Trader:
1. Half of the 70 employees were temporarily suspended from coming to work.
2. We employ 10 high school students, but we sent them back to school because there was no work.
CEO Trader believes in rebuilding Boeing.
I think Boeing can get back to the way it was, but it will take time.
We are preparing for a long battle and are trying to expand our automotive business.
Relationship between Boeing and Japanese companies:
Japanese companies supply many parts to Boeing.
1. There are 150 Boeing partners in Japan.
2. Japan is the largest supplier outside the United States.
The strike is expected to continue for a long time.
There will be further impacts on production of the 777 and 737MAX.
Boeing’s corporate culture:
In August, Kelly Ortberg, a former engineer, was appointed CEO.
1. In January of this year, an accident occurred in which a passenger plane’s door was blown off during flight.
2. The financial results announced on October 23rd showed a final deficit of 940 billion yen.
Later, in a telephone conference, Ortberg emphasized his sense of crisis.
Announcement by CEO Ortberg:
‘We must fundamentally change Boeing’s culture,’ he said.
First of all, ending the strike is the top priority.
Wage increase proposal rejected again:
1. Ten hours after the press conference ended, the proposal for a 35% wage increase over four years was rejected again.
2. The number of votes against the proposal decreased from 94% last time to 64%, but the strike will continue.
S&P Global Ratings:
Boeing’s bond rating is one step away from being “non-investment grade.”
In response to this situation, the company announced measures to improve the situation.
1. Announced delay in delivery of next-generation aircraft, 777X, currently under development
2. Raises up to $25 billion (3.8 trillion yen) in funding
3. Cuts 10% of total workforce, or about 17,000 people
The strike will deal a further blow to fundraising.
Aerodynamic Advisory: Points out problems
Richard Aboulafia, Managing Director:
1. But Boeing’s 20-year history has been disastrous.
2. The company’s management policy of placing excessive emphasis on shareholder returns is a major problem.
Abulafia pointed out that this attitude has intensified since the 2000s.
Mid- to long-term planning and improving treatment are important:
Aircraft quality problems are due to a lack of communication between Boeing management and the production site.
1. Appropriate decisions to ensure safety and quality have not been made.
2. Appropriate resources to ensure safety and quality have not been provided.
The importance of the qualities of top executives:
Boeing’s top executives
1. Have no experience in the core business of aircraft design and manufacturing.
2. This is the price to pay for appointing inadequate personnel to top executive positions.
What Boeing’s management needs:
According to Barnfather, who used to work part-time at a restaurant.
1. What Boeing’s management needs is “empathy” for employees.
2. Management seems to think of us as “just workers.”
Boeing is used all over the world.
Absolute safety is required for aircraft that carry hundreds of passengers at a time.
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