The Boeing car strike is entering its fourth week with no end in sight

As Boeing (nay) car strike threatens to drag into fourth week with no end in sightit remains unclear where things go from here. The company is losing hundreds of millions of dollars much needed cashbut that did not lead her to make a deal.

In fact, it broke off talks with the union that represents the workers, the International Association of Machinists and Aerospace Workers, telling Reuters that “further negotiations do not make sense at this time.”

A labor dispute earlier this year between the plane maker and 125 unionized firefighters gave the impression that the company was preparing to play hardball. After more than two months of negotiations this he locked thema reverse of a strike where a company refuses to let its employees work until an agreement is reached.

The Associated Press reported that firefighters ratified a contract after three weeks (and some prodding from President Joe Biden), but the car strike is much bigger, more disruptive and has higher stakes — observers expect damage to November’s jobs report and weight on the national GDP figures for the rest of the year.

A wage dispute

After months of negotiations, the company reached a tentative agreement with the union in September over a contract that will see members receive a 25 percent raise. Kelly Ortberg, Boeing’s newly installed CEO begged the machinists to ratify the contract and not quit the job.

The more than 30,000 machinists negotiated their full contract for the first time since 2008. The IAM demanded a 40% raise, however, so members rejected the interim agreement and went on strike – as they had promised to do in a 96 .%-vote for authorization.

“We walk and talk in the Labor Movement,” declared the union’s bargaining committee. said then. “We’re in business and now it’s time to show them we’re not going anywhere.”

Some analysts expected Boeing would face up to $1 billion a year in additional costs if it gave the union what it wants, but wages aren’t the only compensation keeping the two sides apart. The union is also looking the restoration of his pensionwhich Boeing killed in 2014 in one of the contract extensions.

Allegations of bad faith bargaining

After the first week and a half of the strike, Boeing sweetened the pot, teasing a 30% increase. There was a catch, though: The company said the bump was “the best and final” offer. The union called this “blatant display of disrespect.” It wasn’t just because of how much the IAM required number was, but How was communicated.

“Your bargaining committee has had no discussion or input regarding this offer,” the union told its members. “We have said all along that the Union would be available for direct talks with Boeing, or at least would be expected to continue mediated talks when the company was ready. These direct dealing tactics are a huge mistake, they damage the negotiation process and they try to bypass the Union’s negotiating committee.”

“Direct deal” refers to how Boeing advertised its offer, which the union said was an effort to pull it out of contract negotiations. That’s it prohibited by federal labor law because it undermines the collective bargaining process.

“We presented the union’s offer first and then transparently shared the details with our employees,” Boeing characterized at the time.

Since then, the company has also cut Boeing workers from their health care plans.

Last week, just before the latest round of negotiations was announced, Rep. Pramila Jayapal of Washington state, the top Democratic caucus leader and the congressional representative who represents the district where much of Boeing’s operations are located, pushed the company to resume negotiations.

“I hope to see Boeing and the machinists come back to the table to work in good faith to address the issues of fair wages and pensions,” she said.

A halftime recovery

Against the background of the strike is the ongoing fallout — stemming mainly from a door explosion aboard a 737 Max 9 jet in January — that has helped send Boeing shares down 40 percent this year. The incident, which prompted a great deal of scrutiny from federal regulators, hampered the company’s efforts to recover from the last crisis 737 Max when two Max 8 planes crashed months apart in 2018 and 2019.

The Federal Aviation Administration, which has stepped up surveillance of Boeing operations after admitting that it was “too hands-off,” imposed a cap on the number of 737 Max planes the company can build. Even before the machinists’ work stoppage, the company was bleeding billions of dollars at a time amid reduced deliveries.

Before the strike, Boeing reportedly tried speeding up production of models using the same thing stop-and-start production methods which he was trying to reduce following the outlet scandal. That’s because the models produced by the workers represented by the IAM make up almost 90% of Boeing’s commercial aircraft order book.

For each day that its assembly lines are closed, Bank of America (ferry), analyst Ron Epstein told Quartz that the company is likely losing $50 million in cash a daythe money he needs. Its investment credit rating is hanging by a thread; several rating agencies are putting the aircraft maker on watch for a cut in junk bond territory. If that happens, Boeing’s problems would be much more expensive to fix because borrowing costs would rise.

“If the strike goes beyond a certain point — I wish I could tell you, maybe a month? – the risk goes up,” Epstein said. “If you go beyond a month, things get more disruptive.”

After initially thinking the machinists would get their 40 percent raise and return to business as usual, he expressed surprise that Boeing is holding out as long as it is.

“At some point, they have to get back into the business of building airplanes,” he said.