By Rebecca L. Grant, Ph.D., Vice President, Lexington Institute.

October 16, 2024 – With the strike at Boeing entering a second month, what about the impact on national security?  On Monday, President Joe Biden dispatched Acting Secretary of Labor Julie Su to Seattle for the first in-person meeting between a government official and the two parties.  Su’s mandate was to “encourage both parties to move forward in the bargaining process,” according to a Labor Department spokesman.

Washington, DC is getting worried, and rightly so.

Back on September 13, Boeing and the International Association of Machinists and Aerospace Workers failed to reach an agreement.  Boeing offered a 25% pay increase over four years and has since raised the offer to 30%.  The union is seeking 40%.

Noted aerospace analyst Richard Aboulafia called the strike by over 30,000 workers at Boeing  “siege warfare.”

The risk of a national security impact will continue to increase as the strike drags on. Work stoppages on the commercial lines may soon throw off the schedule for military planes, too.

Boeing’s KC-46 Pegasus tanker is directly affected.  Boeing has contracted with the U.S. Air Force for a total of 153 of the aerial refueling planes.  The tankers are modified from new Boeing 767s, but the strike has halted production on the 767 line.  Future tanker deliveries will feel the effects of the work stoppage in producing the 767s.  Delays are bad, since the USAF needs new tankers in the fleet to cover the Pacific and deter China, among many other global missions.

The P-8 Poseidon maritime patrol plane could also be impacted.  P-8s, also known as the “submarine killers,” are already flying with the U.S. Navy and many allies, helping to keep watch over Chinese harassment of the Philippines and other hotspots.  In March, Boeing won a contract for 17 more P-8s for allies Canada and Germany.  The P-8 shares about 85% commonality and production space with the 737, although the P-8 has some significant structural modifications.  However, the strike affects the supply chain and labor issues at the facility.

Aerospace manufacturing also relies on a big supply chain.  When work stops on a Boeing factory line, suppliers are hit, too.  Just in the Puget Sound area, the regional economic loss from the strike was calculated at $1.65 billion after just 20 days.

Boeing’s F/A-18EFs, MQ-25 Stingray refueling drones, and the Air Force’s T-7 trainer aren’t produced in Washington state.  However, the strike is also leading to company-wide impacts that will only make matters worse for these crucial defense systems.  Boeing recently announced layoffs of up to 10% of its personnel.  That’s a lot of talent out the door.

Finally, Boeing’s financial health is at risk.  One of Boeing’s first moves was to conserve cash as the strike began.  The worst-case scenario for the Department of Defense is Boeing being damaged to the point where losses in cash flow, talent, etc. drag down defense programs and weaken Boeing as a defense prime.

This article was originally published on the Lexington Institute:Strike at Boeing Hits USAF KC-46 Tanker, Supply Chain | Lexington Institute