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| Union members who work at Boeing voted on Monday night to approve a new labor contract, ending a strike that began on Sept. 13.Credit...M. Scott Brauer for The New York Times |
The aerospace manufacturer and its new chief executive face a daunting to-do list, including improving quality and increasing production of its commercial planes.
After nearly two months on strike, some 33,000 Boeing employees will return to work over the next week. But getting the troubled manufacturer back on track will take a lot longer.
Even before the strike began on Sept. 13, Boeing faced challenges, including a quality crisis, mounting debt and supply chain chaos. The Monday vote by union members to accept a contract and end the strike will put the focus back on how the company and its new chief executive, Kelly Ortberg, plan t
“Resolution of the strike was low-hanging fruit,” Jonathan Root, a senior vice president for Moody’s Ratings, said in a statement on Tuesday.
Here’s a look at some of the items at the top of Mr. Ortberg’s to-do list.
Improve Quality
Mr. Ortberg joined Boeing in August, inheriting a company in trouble.
In January, a panel blew off a 737 Max plane during an Alaska Airlines flight, resurfacing concerns about the quality and safety of Boeing planes five years after two fatal Max crashes. The Federal Aviation Administration increased oversight of the company and limited production of the jet.
Boeing is working to improve quality, including adding more inspections internally and at its suppliers. The company is giving employees more training, simplifying plans and procedures, and reducing the amount of work performed out of sequence to minimize the risk of mistakes.
But that work will take time to bear fruit, and Boeing will need to show the F.A.A. that it is making progress if it wants the regulator’s permission to increase production beyond a limit imposed after the January incident.
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| The Monday vote by union members to accept a contract and end the strike will put the focus back on how the company and its new chief executive plan to address Boeing’s festering problems.Credit...M. Scott Brauer for The New York Times |
Make More Jets
The strike has been particularly damaging for Boeing because most of the 33,000 union members help make most of its commercial airplanes. The walkout brought that work to a standstill, taking a financial toll on the company, the region and the U.S. economy.
The strike cost Boeing about $6.5 billion in lost earnings through October, according to the Anderson Economic Group, a research and consulting firm in Michigan. Those losses total about $11.5 billion when including costs to workers, suppliers, customers and the Seattle region.
Boeing was trying to increase production of the Max, its most popular and lucrative commercial plane, before the strike. Restarting production will be slow. Workers have until next Tuesday to get back to work. Some will require retraining, and it could be weeks before operations are running smoothly.
“Historically, post-strike productivity takes a couple months to recover, and given the heightened focus on quality and safety, we are not expecting anything shorter,” Myles Walton, an analyst at Wolfe Research, said in a research note.
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| Most of the Boeing workers who went on strike make most of the company’s commercial planes.Credit...M. Scott Brauer for The New York Times |
Stabilize the Business
Boeing has also faced mounting debt and rising costs in recent years.
In October, Mr. Ortberg announced plans to restructure the company, including by cutting about 17,000 jobs, or 10 percent of Boeing’s global work force. Last week, Boeing raised more than $21 billion by selling shares to investors to strengthen its financial position and stave off the loss of its investment-grade credit rating.
Boeing still has to complete work on fixed-price government contracts that have become a financial strain because the company’s costs have increased more than expected. It needs to work with the F.A.A. to get a handful of delayed commercial airplanes certified. And Mr. Ortberg has also said he is looking to streamline Boeing’s sprawling operation, which could mean jettisoning some businesses, including perhaps some of its space programs.
“It’s something a new C.E.O. always does when you come into a business,” he told investors last month. “What do we want this company to look like five and 10 years from now? Do these things add value to the company or distract us? So, I’m in the process of going through that.”
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| Boeing’s 737 Max 8 plane. More passenger planes in use today were made by Boeing’s main rival, Airbus.Credit...Ruth Fremson/The New York Times |
Catch Up to Airbus
Boeing was the dominant manufacturer of commercial airplanes for decades. But that changed a few years ago. More passenger planes in use today were made by the company’s main rival, Airbus.
Regaining the ground Boeing has lost will not be easy. And doing so will probably rest on whatever jet the company makes next, a program Mr. Ortberg is expected to oversee.
If plans for that next plane come together in the next four years, the company will have to carry out that work in the Seattle area, under its new labor contract. That was an important concession to the International Association of Machinists and Aerospace Workers. Many of the union’s members are still angry that the company years ago moved production of the 787 Dreamliner to a factory in South Carolina where workers are not unionized.
“They’ve never given us a commitment for an airplane program before it’s launched, before it’s designed,” Jon Holden, the president of District 751 of the union, which represents most of the workers covered by the contract, said on Monday.
But rolling out a new plane is a complex process. Manufacturers produce versions of the same jet for decades. That means they have to plan way ahead, including making sure airlines will keep buying the model for a long time.
Boeing: A Company in Turmoil
Strike Ends, But Problems Persist: After nearly two months on strike, some 33,000 Boeing employees will soon return to work. But getting the troubled aerospace manufacturer back on track will take a lot longer.
Email Sheds Light on a Tragic Crash: Newly revealed correspondence indicates that a Boeing senior official counseled that the company could answer an Ethiopian Airlines pilot’s safety question, but it did not.
Judge Questions Guilty Plea: After objections from the families of the victims of the two 737 MAX plane crashes, a federal judge will rule whether to accept a plea agreement reached by the Justice Department and Boeing.
Slashing Costs: Boeing’s new chief executive announced plans to reduce its work force by 10%, about 17,000 jobs, as he seeks to restructure the company in an effort to slash costs and improve production of planes.
Rudder Control Defects: The National Transportation Safety Board said it had found a defective part in some Boeing planes after investigating an incident at Newark airport.
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