Workers hold picket signs outside a Boeing Co. manufacturing plant during a strike on Friday, Sept. 13, 2024, in Everett, Washington, U.S.
M. Scott Brower | Bloomberg | Getty Images
boeing companyThe company’s factory workers went on strike after midnight on Friday, halting production of the company’s best-selling aircraft after employees overwhelmingly rejected a new labor contract.
It’s a costly development for the manufacturer, which has been struggling to boost production and restore its reputation following the safety crisis.
Workers in the Seattle area and Oregon voted 94.6% against a tentative agreement announced Sunday between Boeing Co. and the International Association of Machinists and Aerospace Workers. Workers voted 96% in favor of the strike, far exceeding the two-thirds needed for a shutdown.
“We struck at midnight,” IAM District 751 President Jon Holden said at a news conference, announcing the vote to cheers from mechanics. Describing it as an “unfair labor practices strike,” he claimed factory workers experienced “discriminatory conduct, forced questioning, illegal surveillance, and we were illegally promised benefits.”
Union members cheer during a press conference following the count of the union contract vote at the main union hall of IAM District 751, Thursday, September 12, 2024, in Seattle, Washington, USA.
M. Scott Brower | Bloomberg | Getty Images
He said Boeing needs to bargain in good faith. Boeing did not comment on his claims.
Boeing Chief Financial Officer Brian West said at an investor conference on Friday that company leadership was disappointed by the rejection and the strike. But he said they wanted to get back to the table and negotiate a new deal “that’s good for our people, good for their families, good for our communities, and that’s what we’re here to do.”
“There is a disconnect,” West said at a Morgan Stanley event, warning that the strike would impact aircraft deliveries and production. He declined to provide a specific estimate of the financial impact and said the impact of the strike would depend on how long it lasted.
He added: “Our current focus is on taking laser-like action to conserve cash, and we will.”
Credit ratings agencies Moody’s and Fitch warned Boeing that a prolonged strike would put it at risk of a rating downgrade, sending the company’s shares down nearly 4% on Friday.
The tentative proposal includes a 25% wage increase over four years and other improvements to health care and retirement benefits, although the union had sought about a 40% pay increase. Workers have complained about the agreement, saying it does not cover increased living costs.
The vote is a blow to Chief Executive Kelly Ortberg, who has been in the job for five weeks. The day before the vote, he urged workers to accept the contract and not strike, saying it would jeopardize the company’s recovery.
Under a tentative deal, Boeing has pledged to build its next commercial plane in the Seattle area to win support from workers as it moves production of its 787 Dreamliner to a non-union plant in South Carolina.
The agreement, if approved, would be the first fully negotiated contract for Boeing mechanics in 16 years. In 2008, Boeing workers went on strike for nearly two months.
Jefferies aerospace analyst Sheila Kahyaoglu estimated that the strike’s 30-day cash impact on Boeing could be as high as $1.5 billion, saying it “could destabilize suppliers and supply chains.” She projected the tentative agreement would have an annual impact of $900 million if passed.
On September 12, at the International Association of Machinists and Aerospace Workers Union Hall 751 in Renton, Washington, the United States, a worker held a sign opposing the proposed contract as workers at the Boeing factory lined up to vote on their 16-year contract. First full contract.
David Ryder | Reuters
Boeing Commercial Airplanes Chief Executive Stephanie Pope told Machinists earlier this week that the tentative agreement was “the best contract we have ever proposed.”
“In past negotiations, the idea was that we should retain something so that we could ratify the contract in the second vote,” she said Tuesday. “This time we discussed the strategy, but we deliberately chose a new path.”
Boeing has burned through about $8 billion so far this year and its debt is mounting. Production fell short of expectations as the company worked to eliminate manufacturing defects and faced other industry-wide issues such as supply and labor shortages.
Boeing Co.’s plane delivery delays are troubling its airline customers. In response, they said recruiting and growth plans must be reworked. Southwest AirlinesAirlines that only own Boeing planes have slashed Boeing delivery forecasts for this year.
“As a result, we currently have the fleet required to fulfill our upcoming schedule,” a spokesman said on Friday. The airline’s leaders were in contact with Boeing ahead of the vote.
Union members build burn barrels at the main union hall of IAM District 751 during the union contract vote count on Thursday, September 12, 2024, in Seattle, Washington, USA.
M. Scott Brower | Bloomberg | Getty Images
Earlier this year, a door jam burst on a nearly new Boeing 737 Max 9, leading to additional federal scrutiny of Boeing’s production lines.
“Our aggressive oversight of Boeing continues,” the Federal Aviation Administration said in a statement on Friday. An agency spokesman said its inspectors would remain on site at Boeing plants during the strike.
White House press secretary Karine Jean-Pierre said at a press briefing on Friday that the Biden administration was in contact with both parties and encouraged Boeing and the unions to negotiate in good faith to reach a “solution for all parties involved.” .
