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Boeing settles strike too late

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Boeing (NYSE: BA) settled its seven-week old strike with machinists agreeing to a four-year contract. In the meantime, the company has lost precious time building planes including its Dreamliner, which is already over a year late for its first delivery. World airlines that have ordered the new aircraft are already in a snit.

According to The Wall Street Journal, "During the standoff, both sides dug in over issues such as job security and who had ultimate authority to run the factories, even as the national economy was undergoing a major upheaval." In other words, Boeing undercut the value of its shares when it could have settled on a similar deal a month ago. During most negotiations management knows how far it is willing to go, but holds out hoping labor will back down. In this case, that did not happen.

While Boeing management has been fiddling around, the company's stock has dropped to $42, near a 52-week low, and down from a period high of almost $99. Boeing faces angry customers, many of whom are asking for compensation for planes that will be late.

Boeing let labor shut it down while the economy went to hell in a hand-basket and its rival Airbus took whatever advantage of that it could. Boeing has a huge back-order of planes. Giving into the union would not have cost it much in profits. It has too many sales to fulfill.

Douglas A. McIntyre is an editor at 247wallst.com.

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Last updated: November 27, 2009: 05:27 AM

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