Potential disaster: The Boeing and Intel crisis reveals key issues within the US economy.
The last AI boom has passed and companies are now forced to lay off employees, freeze large projects, and spend billions to recover lost ground. Meanwhile, Boeing, still reeling from the disasters of 2018-2019, continues to face new blows to its reputation: falling behind Airbus, a malfunction involving an emergency exit hatch that detached during flight, a space crisis, and now a strike by its workers.
American experts and media are convinced: the decline of these two key U.S. corporations vividly illustrates a problem affecting the entire U.S. industry. The United States still leads in advanced developments but is losing its manufacturing skills. Intel and Boeing are no longer the gold standard for quality in their sectors.
Among the main causes of their troubles are an excessive reliance on outsourcing and the "victory of financial managers over engineers." In sectors such as aerospace and semiconductor manufacturing, even a minor mistake by a contractor can prove fatal.
Why Boeing Workers Went on Strike
After the appointment of new CEO Kelly Ortberg in August 2024 and a partial resolution of the space crisis, it seemed that Boeing was finally beginning to recover. However, the situation took a new turn with the first strike in 16 years by unions in Washington state, which began on September 12. 33,000 members of the International Association of Machinists and Aerospace Workers (IAM) rejected the company's terms during contract negotiations.
The aerospace giant offered a total salary increase of 25% over the next four years and a signing bonus of $3,000. While IAM leaders advised signing the agreement to avoid disrupting production, workers were outraged by these conditions. They insisted on an initial demand for a 40% salary increase and the reinstatement of defined benefit pension plans.
Ultimately, 95% of association members voted against the agreement, with even more supporting the strike.
"Many of us have been expecting this for a long time. We should be paid much more for what we do. If Boeing management claims we are the best in the industry, they should treat us like the best in the industry. You sell planes worth $180 million, and the labor cost percentage is minuscule," said striker Jim Bloomer. He, like many others, had been saving money to sustain a long protest.
"This is about fighting for our future. We will return to the negotiating table to move forward on the issues our members consider important," said IAM union president John Holden.
Subsequently, Boeing executives made a new proposal: a 35% salary increase over four years. This was still deemed insufficient, with 64% of union members voting "no." The strike continued. After seven weeks of negotiations, protesters supported the company's final proposal, ending the most expensive strike in the U.S. in the last 25 years. They began returning to work on November 7.
Employees will also receive a bonus of $12,000, a portion of which they can contribute to their retirement accounts. However, the new agreement did not restore the traditional pension plan as demanded by the strikers.
1 "Over the decades, both unionized and non-unionized companies have moved away from such pension plans. Under these plans, retirees would receive a fixed monthly amount regardless of how long they lived or how well the pension fund's assets performed.
The workers' anger was primarily due to the loss of this pension plan, which is why the previous two proposals were rejected. This also led to 41% of union members not supporting the final agreement," wrote CNN. Union leaders promise to continue fighting for these payments.
Economic Consequences of the Strike
As negotiations dragged on, it became clear that Boeing was falling behind in aircraft deliveries. According to Standard & Poor's, the strike added nearly $1 billion in losses to the company's financial results each month.
As a result, the corporation announced a plan to cut approximately 17,000 jobs (10% of its workforce), seek an additional $25 billion in loans, and sell stocks and debt obligations.
The corporation's financial situation had already been dire following the fatal crashes of 2018-2019. Since then, the company has incurred over $30 billion in losses, with no end to the crisis in sight. Even before the strike, it was not expected that the corporation would return to profitability in the near future: shares have fallen by 60% over the last five years and by more than 30% after the Alaska Air crash in early 2024.
A new blow could harm the U.S. economy, as Boeing is the largest exporter in the country. The company estimates its annual contribution to the American economy at $79 billion, directly and indirectly supporting 1.6 million jobs. The corporation's credit rating has also suffered, nearing "junk" status. This implies an increased risk of default and possibly bankruptcy.
2 However, even if the company files for bankruptcy, it will not cease operations. It simply means that Boeing will shed some of its unmanageable debts. Numerous successful companies, including General Motors and most national airlines, have gone through this and later reported record profits.
Moreover, it is unlikely that a financial crisis would destroy the corporation. Boeing and its European competitor Airbus together hold 90% of the global aircraft manufacturing market. Such a duopoly ensures their survival.
The Boeing Paradox
In April, the American magazine The Atlantic published a scathing article on Boeing, highlighting the paradoxical fact that the aircraft manufacturing company has lost interest in building airplanes. The publication used Boeing as an example to illustrate how reliance on outsourcing and the pursuit of contracts have led to the degradation of the industry.
The company's founder, Bill Boeing, lived on the factory grounds. In contrast, a situation has emerged where the corporation's leadership, preoccupied with financial reports, is detached from the manufacturing process.
The Atlantic cites a telling example when, during a flight on a Boeing 737 operated by Alaska Airlines, the doors flew open. The then-CEO of the corporation, Kevin Daugherty, who rarely visited the Seattle factory, later admitted: he did not understand what had gone wrong, as he did not know how the plane had been assembled at all. He confessed that the company had "no records of work performed."
3 "This incident illustrates a peculiar story of Boeing, which for a quarter of a century has slowly but steadily distanced itself from the