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Boeing factory workers strike for first time since 2008
Workers hold picket signs outside a Boeing Co. manufacturing facility during a strike in Everett, Washington, U.S., Friday, Sept. 13, 2024.
M. Scott Brauer | Bloomberg | Getty Images
BoeingBoeing factory workers walked off the job after midnight on Friday, halting production of the company’s best-selling jets after staff overwhelmingly rejected a new labor contract.
It is a costly move for the manufacturer, which has struggled to ramp up production and restore its reputation following safety crises.
Workers in the Seattle and Oregon areas voted 94.6 percent against a tentative agreement that Boeing and the International Association of Machinists and Aerospace Workers announced Sunday. Workers voted 96 percent in favor of a strike, far more than the two-thirds vote needed for a work stoppage.
“We’re striking at midnight,” Jon Holden, president of IAM District 751, said at a news conference announcing the results of the vote to cheers from machinists. Holden called it an “unfair labor practices strike,” alleging that factory workers had suffered “discriminatory conduct, coercive interrogations, illegal surveillance and illegal promises of benefits.”
Union members applaud during a news conference following the counting of votes on the union contract in the Main Hall of the IAM District 751 Union in Seattle, Washington, U.S., Thursday, Sept. 12, 2024.
M. Scott Brauer | Bloomberg | Getty Images
He said Boeing needs to negotiate in good faith. Boeing did not comment on his claims.
Boeing Chief Financial Officer Brian West said Friday at an investor conference that company leaders were disappointed with the pushback and strike, but added that they want to get back to the table to negotiate a new deal “that’s good for our people, their families, our community, and we intend to do just that.”
“There was a disconnect,” West said at the Morgan Stanley event, warning that the strike would affect aircraft deliveries and production. He declined to provide specific estimates of the financial impact, saying the strike’s effect would be determined by its duration.
“Our immediate focus is to be laser-focused on actions to preserve cash, and we will do that,” he added.
Credit rating agencies Moody’s and Fitch warned Boeing that a prolonged strike put it at risk of downgrades, sending the company’s shares down nearly 4% on Friday.
The tentative proposal included 25% pay increases over four years and other improvements to health and retirement benefits, although the union had requested increases of around 40%. Workers had complained about the deal, saying it did not cover rising costs of living.
The vote is a blow to CEO Kelly Ortberg, who has been on the job for five weeks. A day before the vote, he had urged workers to accept the contract and not strike, saying that would jeopardize the company’s recovery.
Under the tentative agreement, Boeing had promised to build its next commercial jetliner in the Seattle area in an attempt to win support from workers after the company moved production of the 787 Dreamliner to a nonunion factory in South Carolina.
If approved, the deal would be the first fully negotiated contract for Boeing machinists in 16 years. Boeing workers went on strike in 2008 for nearly two months.
Sheila Kahyaoglu, an aerospace analyst at Jefferies, estimated that the cash impact of a strike within 30 days could represent a $1.5 billion hit for Boeing and said it “could destabilize suppliers and supply chains.” She predicted the tentative deal would have had an annual impact of $900 million if approved.
A worker holds a sign in opposition to the proposed contract as Boeing factory workers wait in line to vote on their first comprehensive contract in 16 years, at the International Association of Machinists and Aerospace Workers District 751 union hall, in Renton, Washington, U.S. on September 12, 2024.
David Ryder | Reuters
Stephanie Pope, chief executive of Boeing’s commercial airplane unit, told machinists earlier this week that the tentative deal was the “best contract we’ve ever put forward.”
“In previous negotiations, the idea was that we should hold something back so that we could ratify the contract in a second vote,” he said Tuesday. “We talked about that strategy this time, but we deliberately chose a new path.”
Boeing has burned through nearly $8 billion so far this year and is facing mounting debt. Production has fallen short of expectations as the company works to eliminate manufacturing glitches and grapples with other industry-wide problems, including supply and labor shortages.
Boeing’s delays in aircraft deliveries have angered its airline customers. In response, they said they had to rethink their hiring and growth plans. Southwest Airlineswhich only has Boeing planes, has already drastically reduced its expectations for Boeing deliveries for the year.
“As a result, we currently have the fleet necessary to meet our upcoming schedules,” a spokesman said Friday. Airline leaders were in touch with Boeing ahead of the vote.
Union members build burn barrels in the main hall of the IAM District 751 union as votes are counted on the union contract in Seattle, Washington, U.S., Thursday, Sept. 12, 2024.
M. Scott Brauer | Bloomberg | Getty Images
The explosion of a door stopper on a nearly new Boeing 737 Max 9 earlier this year has sparked additional federal scrutiny of Boeing’s production lines.
“We continue our aggressive oversight of Boeing,” the Federal Aviation Administration said in a statement Friday. An agency spokeswoman said its inspectors would remain at Boeing factories during the strike.
White House press secretary Karine Jean-Pierre said at a news conference Friday that the Biden administration is in contact with both sides and encouraged Boeing and the union to reach “a solution here for all parties involved” in good-faith negotiations.
