Boeing Strike Is Over: Did Negotiation Save The Day?

by drjim on November 6, 2008

The Strike Is Over At Boeing, But Who Got What?

The Strike Is Over At Boeing, But Who Got What?

Just in case you had not heard, the Association of Machinists and Aerospace Workers has settled its strike with Boeing. The machinists had been off the job and on the picket lines for 52 days – a very long time for a Boeing strike. Both sides are calling the agreement that they came to as being a “fair compromise”. But was it? Let’s take a closer look at how things worked out from a negotiating point-of-view and see what we think happened…

One of the key components of the negotiated agreement is that this contract will cover 4 years unlike previous contracts which have covered only 3 years. This was very important to Boeing because in three years they will just be reaching the peak of production for their new 787 jet and the possibility of having another cripling strike occur then could damage the company’s bottom line as well as their reputation.

The machinists union is actually fairly small – only 27,000 workers. However, they were negotiating from a position of strength. Boeing currently has 3,725 orders for new airplanes that need to be filled. It was rumored that the strike was costing Boeing $100M a day. The machinists were also helped by the fact that the type of work that they perform is highly specialized and not easily replaced. The work done by the machinists has a direct bearing on the final safety of the finished product and this is something that Boeing needs to make sure never gets compromised.

Boeing had bigger issues to consider during their negotiations with the machinists. Boeing is getting ready to face another contract renegotiation with the 21,000 strong Society of Professional Engineering Employees in Aerospace (SPEEA). This contract expires on December 1st so Boeing really needed to get the machinist strike wrapped up before they potentially had another strike on their hands. This also meant that Boeing could not just cave in to the machinists because then the SPEEA would be expecting the same.

Boeing has some other issues that had to be weighing on their decision making team. They were already going to have problems meeting their goal of delivering the first 787 Dreamliner planes in 2009. The lead time for getting a new plane design approved to be sold is quite lengthy. After Boeing has been able to assemble several of the first 787 planes, they will then need to start almost a year of around-the-clock flight testing.

So who walked away with what in the final contract?

It sure looks like the machinists got what they wanted. Specifically, Boeing agreed to limit its use of contractors doing work that machinists had previously done. Contractors will still be able to deliver parts to the production lines; however, the machinists will be in charge of tracking and distributing those parts once they enter the factory. I believe that this was the key point of the negotiations – if Boeing had been able to expand the role of contractors, then they would have been able to use fewer machinists. However, it looks like in order to end the strike quickly, Boeing backed away from this demand.

What’s a negotiator to learn from all of this? Your negotiating power is not always obvious. The machinists were in a powerful situation and they knew it. They used this as leverage to prevent Boeing from reducing their importance and ensured that the next time they enter into a negotiation, they will be well positioned to get what they want.

Who do you think came out ahead in this negotiation? Do you think that Boeing erred in settling the strike without getting the ability to use more contractors? Do you think that the machinists should have held out to remove contractors from delivering parts to the production line? Leave a comment and let me know what you are thinking.

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