Over 30,000 Boeing Workers were due to go on strike on Friday, halting production of most of the company’s aircraft, after staff overwhelmingly rejected a new labor contract.
It’s a costly development for the manufacturer, which has struggled to ramp up production and restore its reputation after security crises.
Workers in the Seattle and Oregon areas voted 94.6 percent against a tentative agreement presented Sunday by Boeing and the International Union of Mechanical and Aerospace Workers. Workers voted 96% in favor of the strike, well above the two-thirds vote required for a work stoppage.
“We are striking at midnight,” IAM District 751 President John Holden said at a news conference announcing the results of the vote. He called it an “unfair labor practice strike,” claiming factory workers had experienced “discriminatory treatment, coercive interrogation, illegal surveillance and we were illegally promised benefits.”
He said Boeing must negotiate in good faith.
Boeing did not immediately comment, but Stephanie Pope, chief executive of Boeing’s commercial airplane unit, told engineers earlier this week that the tentative agreement was the “best contract we’ve ever presented.”
“In previous negotiations, the thinking was that we had to hold something back so that we could ratify the contract in a second vote,” he said. “We talked about that strategy this time, but we deliberately chose a new path.”
A worker walks outside a Boeing Co. manufacturing facility. in Renton, Washington, USA on Thursday, September 12, 2024.
M. Scott Brauer | Bloomberg | Getty Images
The tentative proposal included wage increases of 25 percent and other improvements in health care and pension benefits, although the union had requested increases of about 40 percent. Workers had complained about the deal, saying it did not cover the increased cost of living.
The vote is a blow to CEO Kelly Ortberg, who has been in the top job for five weeks. A day before the vote, he had urged workers to accept the contract and not to strike, saying it would jeopardize the company’s recovery.
Under the tentative agreement, Boeing had promised to build its next commercial jet in the Seattle area, an effort to win over workers after the company moved 787 Dreamliner production to a non-union plant in South Carolina.
The deal, if approved, would be the first fully negotiated contract for Boeing engineers in 16 years. Boeing workers went on strike in 2008 for nearly two months.
The ultimate economic impact of this strike will depend on how long it lasts.
Jefferies aerospace analyst Sheila Kahyaoglu estimated the 30-day cash impact of a strike could be a $1.5 billion hit to Boeing and said it “could destabilize suppliers and supply chains.” He predicted the tentative deal would have an annual impact of $900 million if approved.
Boeing has burned through about $8 billion so far this year and has mounting debt. Production has fallen below expectations as the company works to eliminate manufacturing defects and faces other industry-wide problems such as supply and labor shortages.
An explosion of a nearly new Boeing 737 Max 9 earlier this year brought additional federal scrutiny of Boeing’s production lines.
