A settlement to the strike at Boeing ( BA) was easy to imagine when the workers were calling for a 13% raise and the company was offering an 11% pay hike.

But now, a settlement seems distant, with Boeing and the International Association of Machinists at odds over a different, but no less crucial, issue -- outsourcing practices that will shape the company's future.

Talks broke down Monday, just a day after they had resumed, meaning the strike by 27,000 IAM members is now in its 39th day. Boeing shares closed Tuesday at $45.07, after falling on Friday to $40, their lowest price since March 2004.

In a recent letter to employees, Boeing CEO James McNerney said limits on contract manufacturing could lead Boeing to resemble one of the U.S. automakers, Ford ( F) and GM ( GM), who remarkably managed to transform worldwide industry leadership into a struggle for survival.

U.S. auto companies "all but fatally wounded themselves years ago by promising unsustainable wage and benefit levels and by agreeing to contract conditions (including job guarantees) that limited their flexibility to run their businesses in the face of intense global competition," McNerney wrote. "Today, their market shares continue to fall, and their layoffs have grown by the thousands."

For the IAM, the issue is not so global. Rather, it says "the company is attempting to put the union in an unacceptable position to bargain away our members' jobs," according to a letter to members from IAM District 751 leader Tom Wroblewski. He said Boeing wants to outsource 2,000 jobs involving material delivery, inventory and delivery of parts and materials.

"The IAM is interested in bargaining a contract for the future, which provides success for Boeing and for our workforce -- but Boeing has a different agenda," Wroblewski said.

Aviation analyst Scott Hamilton questions Boeing's effort to compare itself to the automakers, whose "largest problem has been they don't build cars the public wants to buy." That's not the case for Boeing, he believes. "The 787 clearly demonstrates that Boeing understands what the airline industry wants," he says.

Still, Hamilton noted that, "through outsourcing jobs, Boeing creates new competitors in Japan, China and Russia. Jobs are important to the union membership, but the larger issue is that we see the destruction of the U.S. aerospace industry, because Boeing along with Airbus and Embraer ( ERJ) and Bombardier are creating new competitors through strategic outsourcing."

For the moment, no new talks are scheduled. From the IAM side, discussions will begin anew "when workers start running out of money," Hamilton says. Boeing might be brought back to the table when "pressure from customers and suppliers" builds. However, he says, "Boeing has the cash to withstand a very long strike."

In the meantime, the world economic slowdown and the strike are slowing aircraft deliveries around the globe. Assuming the strike lasts for two months, "we now forecast a total of 410 deliveries in 2008, 14% down from our previous forecast of 480," wrote Bank of America analyst Harry Nourse, in a recent report.

Overall, Standard & Poor's says "we expect the sector to see fewer orders because of global economic weakness, which has reduced air traffic considerably, in combination with financial market turmoil, which has created uncertainty about aircraft financing."

Nourse estimates Boeing will earn $4.84 a share in 2008, a reduction from his prior estimate that assumes a monthly impact of 47 cents due to the strike. At $44 a share, Boeing trades at nine times forward earnings. The last time Boeing traded at eight times earnings was following the Sept. 11, 2001, terrorist attacks, Nourse notes.

The analyst has a neutral rating on the stock and a 12-month price target of $65.

"We find it hard to see how Boeing stock can outperform the market against a backdrop of global economic slowdown and very poor airline news," he wrote. Bank of America has a financial relationship with Boeing that includes providing investment banking services and holding at least 1% of the company's common stock.