The ongoing Boeing strike and the workers' rejection of the aerospace giant's latest contract offer have created significant ripple effects throughout the aerospace supply chain. With more than 33,000 Boeing employees on strike, suppliers like Independent Forge, a small family-run operation in Orange County, California, are feeling the strain. The aerospace industry relies heavily on these suppliers to produce essential parts for commercial jets, but as the strike drags on, businesses are being forced to take drastic measures to survive.
Andrew Flores, president of Independent Forge, explained the challenges his company faces. "If the strike lasts another month, we may have to cut our operations to three days a week," Flores said, adding that layoffs have already begun. The company, which supplies aluminum aircraft parts, is trying to avoid more job cuts as it needs its 22 remaining workers to stay operational and meet demand once the strike ends. "Their knowledge, I can't replace that," he emphasized, highlighting the critical role these employees play in the company's future.
The union representing Boeing workers, the International Association of Machinists and Aerospace Workers (IAM), announced that 64% of its members rejected the latest contract offer from Boeing. The offer included a 35% wage increase, but workers are holding out for more, including a demand for pension restoration, which was eliminated for new employees a decade ago. The strike has halted production for nearly all of Boeing's commercial jets, adding to the already significant pressures on the company's global network of suppliers.
Boeing's supply chain includes thousands of businesses, from small operations like Independent Forge to larger manufacturers such as Spirit AeroSystems, which produces major components for Boeing aircraft. The continued strike is likely to force many of these suppliers to take extreme measures, including furloughs, freezes on investment, and even halting production. According to Vertical Research Partners analyst Rob Stallard, "Starting up the supply chain again after such disruptions will be the biggest concern, especially for those suppliers that have had to cut workers."
Spirit AeroSystems, one of Boeing's most significant suppliers, has already furloughed 700 workers and warned of potential layoffs if the strike extends beyond November. The strike comes at a time when Boeing is grappling with quality-control issues that resulted in the Federal Aviation Administration (FAA) capping 737 MAX production rates. Analysts warn that it could take up to a year to restore production to pre-strike levels, further complicating Boeing's efforts to meet demand.
The impact is also being felt among suppliers focused on workforce development. Pathfinder, a Seattle-area supplier, operates a project aimed at training high school students in aerospace skills. CEO Dave Trader indicated that the company might have to lay off more employees and send students back to school rather than continuing their on-site training. "It's a tough situation," Trader said, noting the importance of keeping the skilled workforce intact despite the challenges.
Boeing's challenges are not limited to supply chain disruptions. The company is also under significant financial pressure. The strike has paused work on several models, delaying deliveries and threatening Boeing's already fragile cash flow. Boeing had planned to raise billions of dollars to shore up its finances, but that funding is contingent upon resolving the strike and restarting production. Fitch Ratings recently warned that Boeing's credit rating is at risk, and any further delays could lead to a downgrade, making recovery more costly and difficult.
Adding to the tension, union members have been divided over the contract negotiations. Some workers, desperate to return to their jobs, feel they should accept the current offer, while others are pushing to hold out for the pension benefit. The union, recognizing these divisions, issued a statement reminding members to respect one another's choices and refrain from "bullying" each other over their votes. "Respect. Fairness. A future that we decide, not one handed down to us from corporate boardrooms," the IAM statement read.
