The Kelly Ortberg era at Boeing has been marked by something resembling hope — a decidedly faint flicker of optimism that the too-big-to-fail company might get back to making super safe planes and providing good jobs to the tens of thousands of workers needed to build them.
Less than two months into his tenure as CEO, Ortberg has largely understood the assignment.
But a big stumble this week in labor negotiations may have torched whatever goodwill he’d built with the rank-and-file, underscoring just how treacherous the path ahead is, even for a seasoned aviation executive whose predecessor set an extremely low bar.
See here: We’re nearly two weeks into a strike by Boeing’s largest labor union. The strike is the problem Ortberg needs to get a grip on stat, because the company can’t build its best-selling planes without its 33,000 unionized machinists.
Initially, Ortberg seemed to have buy-in from labor leaders, who publicly acknowledged that the new boss was walking into a conflict that predated him by 16 years. And in a surprise move last week, Ortberg announced that executives’ paychecks would be curbed temporarily to conserve cash while the strike continues. All of that gave the new boss, who spent his first day at work touring a factory floor, a kind of pro-labor halo.
But on Monday, Boeing management fumbled the ball.
The company was ready to raise workers’ pay by 30% over the four-year contract and increase 401(k) benefits, sweetening a 25% increase that the union overwhelmingly voted down earlier this month.
Trouble is, the company went public with the improved offer before getting a response from the union’s negotiators, who saw the move as a slap in the face and an attempt to drive a wedge between members and the committee that represents them.
“This tactic is a blatant show of disrespect” to union members and the bargaining process, the International Association of Machinists wrote Monday. “They have severely underestimated the strength of our unity.”
Boeing pushed back in a statement Monday night, saying it had “bargained in good faith.”
“We believe our employees should have the opportunity to vote on our offer that makes significant improvements in wages and benefits,” Boeing said in a separate statement Tuesday. “We’ve reached out to the union to give them more time and offer logistical support once they decide to vote.”
It’s not clear what Boeing thought the advantage would be of releasing the offer publicly.
There’s an old saying for labor relations, says Art Wheaton, director of labor studies at Cornell University’s School of Industrial and Labor Relations: “You never want to negotiate in the press.”
“The bargaining team is responsible for negotiating with management,” Wheaton said. “And what Boeing did is it say, ‘yeah, I don’t care.’ … They just sent it out to everybody.”
He added: “I don’t know what their game plan is. I think they were just not very bright on how they did that.”
It’s also not clear what role Ortberg played in the decision to take the offer directly to union members and the media. But it’s a clear departure from the diplomatic approach the CEO had signaled early on.
“Everybody thinks unions strike over money,” Wheaton notes. But often, it’s also about respect. “Obviously Boeing did not respect the union in this setup.”
Ortberg came into the top job with a big advantage: His predecessors were so openly hostile toward labor, even small gestures seemed to buy him some credibility.
It’s not too late, according to Richard Aboulafia, a managing director at aerospace consulting firm AeroDynamic Advisory, who told me he is “still hopeful” Ortberg can right Boeing’s course, even with an absurd litany of self-inflicted crises playing out at the same time.
“Diplomacy matters in situations like this,” Aboulafia said, adding: “It’s hard to tell what’s Ortberg’s mistakes … and what’s just Boeing institutional arrogance.”
