Why Boeing Doesn't Need 18 Billion Dollars Right Now

Hey everyone,

Right now 27, 250 unionized machinists at Boeing have been on strike for about a week. The union has 140 million in the bank to support striking workers - a 6 month supply - and analysts are estimating that each day the machinists are not at work, Boeing has 100 million dollars of deffered revenue. That is, Boeing cannot charge its customers 100 million dollars each day that the workers are on strike. Therefore

30 days/month * 6 months * 100 million defferred revenue/ day = 18,000 million = 18 billion in deffered revenue

Now, I'm not categorically anti-union. I don't want to see worker's conditions like we had in the days of Andrew Carnegie. However, Boeing is in a situation which it cannot, under any circumstances, allow these workers to get what they want. Airbus, once an afterthough, is straining Boeing. Northrup Grumman is also voraciously fighting for that $35 Billion tanker deal that should have been a shoe-in for Boeing. The airline industry and the military needs new planes at a time they cannot afford them. Boeing is fighting for its place as the undisputed leader in aviation design.

Now, details of who wants what are confidential, so for all I know, Boeing could be wanting to cut workers pay by 50% and be asking for the sacrifice of their first born child. But I doubt they are. I would be suprised Boeing could be that heartless.

Striking during this time when Boeing's standing in its industry is under attack is unethical on the part of the workers. They should continue to be working on their old contract while working towards a new one. If Boeing had gotten the $35 Billion tanker deal, I'd probably be okay with the workers striking. But with the frequent delays on the new 787 dreamliner and the nebuluous state of that tanker deal, the workers need to invest in their own company.

How?

Agree to the old contract until the first 787 Dreamliner is produced.

Everyone knows that the new 787 Dreamliner will destroy Airbus' market share. Tell Boeing they'll accept their old contract until the unions crank out the long delayed dreamliner. Then, when the first 787 dreamliner comes out they get a bigger increase than they otherwise would have gotten. This allows Boeingto become an effective competitor with Airbus and Northrup Grumman and the workers show they care about Boeing, not their own salaries.

Unless of course the workers don't care about Boeing.

If you want a viable business, you need to be willing to compete. The workers don't want Boeing to meet the challege that Airbus and Northrup has given them.

These workers don't deserve to call themselves Boeing employees.

-Mansij Hans, E.I.T.
Member, Intigril Capital Management

Disclosure: My views on the Boeing Machinist Union strike do not necessarily reflect the views of the other members of Intigril Capital Management.