Boeing's back 'against the wall' amid union strike: Expert

Boyd Group International president Mike Boyd joins Catalysts hosts Seana Smith and Madison Mills after more than 30,000 Boeing (BA) union workers voted to reject a new labor contract proposed by the aircraft manufacturer earlier this week. The labor union's contract with Boeing expired at midnight.

With the overwhelming majority of union members voting in favor of a strike, Boyd says Boeing will “have to go back to the bargaining table and be a whole lot harder than they were before.”

“There's no question about it; Boeing has its back against the wall” regarding product, public perception, and markets, Boyd adds, believing the union has “a lot of leverage” in negotiations.

Boeing has come under fire for safety concerns and federal probes into its manufacturing process throughout 2024, weighing on the stock and bringing it down by roughly 36% year-to-date.

“The new gentleman running the place has much more on his plate than just a strike,” Boyd tells the Catalysts team. The company brought on a new CEO, Kelly Ortberg, in an effort to improve perception around transparency and trust.

“Keep in mind this is an economic hit,” Boyd explains, saying, “there are a lot of suppliers out there across the US and internationally that being told this morning, don't ship any more parts” after having “already gotten that message earlier with the slowdown on the 737 and 787 programs.”

Boeing’s entire infrastructure “right now is under severe stress,” the company is "forced to try to settle this as quickly as they can,” Boyd tells Yahoo Finance.

He notes that the company hasn’t invested in new products, which is “going to come back and bite them” as “they have nothing to replace the 737.”

Amid uncertainty around the sustainability of Boeing’s business, Boyd says the “only one game in town" now looks to be Airbus (AIR.PA)

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Naomi Buchanan.

Video Transcript

The Boeing strike, taking a look at shares under a bit of pressure.

Over 30,000 union workers voting overwhelmingly to reject a new labor contract.

Boeing workers across the west coast stopping work and walking out for the first time in 16 years when you take a look at the downward move in the stock falling just about 2.5% today down almost 40% this year.

As the company also faces scrutiny over safety concerns.

Let's talk about this with Mike Boyd.

He's the president of Boyd Group International, Mike, it's great to have you on again with us.

So let's talk about the fact.

94% of members voted to reject the contract.

96% voted to go on strike.

What does that then?

Tell us about?

Maybe how long this strike could last?

Well, we don't know, I mean, it depends on what they're striking over, but when you had, you know, the people running the I AM who put this deal together, they didn't follow up a turnip truck, they know labor relations.

What this says is that they're going to have to go back to the bargaining table and be a whole lot harder than they were before.

It may be just a couple of minor issues that will fix it.

But where you have, you know, 96% saying we want to go on strike, 94% rejecting the contract, their union negotiated.

Uh This may be a long situation.

It might be, especially because if you're a union worker, you're probably thinking no better time to strike than right now.

Given the problems that Boeing has been experiencing from your point of view.

Do they have kind of all the chips in their hands?

Well, yeah, they, they, they do.

There's no question about it.

Boeing is, has its back against the wall in terms of product, they have the back against the wall in terms of public perception, they have the back against the wall in terms of markets.

Um And I think, you know, the, the union says, look, we want something more and they do have a lot of leverage to get it.

You know, the question is, uh, the new gentleman running the place has a lot more on his plate than just a strike.

There's a whole lot of other things he has to deal with.

This doesn't make it any easier.

So then does that make it more likely that maybe they will concede to some of the wants of the union workers?

Given the fact that they already are under significant amount of pressure, given the stacking number of challenges that Boeing is facing.

Yeah.

Iii I think right now the cards are in the union's hands.

But again, Boeing has so many different problems facing it that in the near term, they're gonna have to try to settle this because keep in mind, this is an economic hit.

There are a lot of suppliers out there across the US and internationally that are, you know, being told this morning, don't ship any more parts.

Uh And they've already gotten that message earlier with the slowdown on the 737 and 787 programs.

So Boeing its entire infrastructure, its entire founding if you will right now is under, under severe stress.

And I think the thing is they're gonna get forced to try to settle this as quickly as they can.

Mike, is this a nail in the coffin for the company then, you know, II I hate, would hate to say that, but you know, is this another Curtis aircraft that in 1940 was the biggest in the country and eight years later, he was out of business.

I don't know.

They do not have, they've not invested in new product, new airline products that's gonna come back and bite them.

That's their biggest problem.

They have nothing to replace the 737 which is probably maybe, you know, wanna upgrade too many already.

So if they're going to stay in this global business, they're gonna have to figure out what to do.

And that means investing in not stock price or not games, but a new product, right?

But because i it's only day one of the strike.

So, so, so when we put this in perspective for our viewers out there, at what point should they get a bit more nervous?

Iiii I think right now that the, this, this is where it is right now, I think right now, Boeing has to settle this strike like as quickly as they possibly can to focus on other things.

That means, you know, the folks at the I am, they hold the cards.

I am curious from a shareholder perspective.

How long we've had some Boeing shareholders?

Come on the show and talk about this idea that they don't have competition.

So Boeing is bound to come back almost this idea that they're too big to fail.

How long does that argument continue to hold water?

In your view?

The argument is there is no other manufacturer other than Airbus, you know, you know, the lead sleds being put out in China will never get into the, into the global marketplace.

So there's only one game in town that's Airbus and Airbus has invested in a new platform by buying the uh C series series uh airliner from uh Bombardier in Canada.

So they are way ahead of the curve when it comes to Boeing, but is Boeing too big to fail?

II, I don't know the the fact of the matter is they don't have a new product beyond the 737.

That is their number one problem in the business.

All right, Mike, we got to leave it there.

Mike Boyd.

Always great to talk to you here, Boyd Group International President.

Thanks.

Thank you.