Workers hold picket signs during a strike outside a Boeing manufacturing plant in Everett, Washington, USA, Friday, September 13, 2024.
M. Scott Brauer | Bloomberg | Getty Images
BoeingFactory workers at the plant went on strike after midnight on Friday, halting production of the company’s best-selling aircraft after employees overwhelmingly rejected a new collective agreement.
It’s a costly development for manufacturers who have been struggling to increase production and restore their reputations in the wake of the safety crisis.
Workers in the Seattle area and Oregon voted 94.6% against the tentative agreement announced Sunday by Boeing and the International Union of Machinists and Aerospace Workers, after 96% of workers voted in favor of striking, far more than the two-thirds majority needed to strike.
“We’re going to strike at midnight,” John Holden, president of IAM District 751, said at a press conference announcing the results of the vote amid cheers from machinists. Holden described it as an “unfair labor practice strike,” alleging that factory workers had experienced “discriminatory practices, coercive interrogations, illegal surveillance and unlawful promises of benefits.”
Union members cheer during a press conference following the tabulation of the collective agreement vote at the IAM District 751 Main Union Hall in Seattle, Washington, USA, Thursday, September 12, 2024.
M. Scott Brauer | Bloomberg | Getty Images
He said Boeing needed to negotiate in good faith. Boeing declined to comment on his allegations.
Boeing Chief Financial Officer Brian West said at an investors conference Friday that company leaders were disappointed by the refusal and the strike, but he wanted to return to the table to negotiate a new contract, saying “that’s what’s good for our employees, their families and our communities, and that’s exactly what we’re going to do.”
“There was a disconnect,” West said at a Morgan Stanley event, warning that the strike would affect aircraft deliveries and production. He said the impact of the strike would depend on how long it lasts, without offering a specific estimate of the economic impact.
“Our immediate focus is to concentrate on cash-conserving actions, and we intend to do so,” he added.
Ratings agencies Moody’s and Fitch warned Boeing it was at risk of a downgrade because of the prolonged strike, sending the company’s shares down nearly 4% on Friday.
The tentative proposal included a 25 percent wage increase over four years, improved health care and retirement benefits, but the union wanted a wage increase of about 40 percent. Workers had expressed dissatisfaction, saying the agreement did not cover rising costs of living.
The vote is a blow to Kelly Ortberg, who has been CEO for five weeks, after urging workers to accept the deal and not strike, saying a strike would jeopardize the company’s recovery.
The tentative agreement had Boeing promising to build its next generation of commercial jetliners in the Seattle area after shifting production of the 787 Dreamliner to a non-union factory in South Carolina in a bid to win worker support.
If approved, the agreement would be the first fully negotiated contract in 16 years for Boeing machinists, whose workers went on strike for nearly two months in 2008.
Sheila Kahyaogulo, an aerospace analyst at Jefferies, estimated that the 30-day cash impact of the strike could hit Boeing by $1.5 billion, saying it “could destabilize suppliers and the supply chain.” She predicted that if a tentative agreement were passed, there would have been an annual impact of $900 million.
Boeing factory workers line up to vote on their first full contract in 16 years, at the International Machinists and Aerospace Workers Local 751 union hall in Renton, Washington, on September 12, 2024. A worker holds a sign opposing the proposed contract.
David Ryder | Reuters
Boeing Commercial Airplanes CEO Stephanie Pope told mechanics earlier this week that the tentative agreement was “the best contract we’ve ever offered.”
“In past negotiations, the idea was to put something on hold so that the contract could be ratified in a second vote,” she said Tuesday. “We discussed that strategy this time, but we deliberately chose a new path.”
Boeing has spent about $8 billion so far this year and its debt is soaring, and production has been below expectations as the company tries to stamp out manufacturing defects and faces industry-wide problems including supply shortages and labor shortages.
Boeing’s delays in aircraft deliveries are hurting its airline customers, who say they are forcing them to rethink hiring and growth plans. Southwest AirlinesThe airline, which only has a Boeing fleet, has already significantly slashed its forecast for Boeing deliveries this year.
“As a result, we currently have the aircraft we need to meet our upcoming schedule,” a spokesman said Friday. The airline’s executives had been in contact with Boeing before the vote.
Union members build a burning barrel in the IAM District 751 main union hall as union contract votes are counted, Thursday, September 12, 2024, in Seattle, Washington, USA.
M. Scott Brauer | Bloomberg | Getty Images
The explosion of door plugs on nearly new Boeing 737 Max 9 planes earlier this year has prompted further federal scrutiny of Boeing’s production lines.
“Our active monitoring of Boeing continues,” the FAA said in a statement on Friday. An agency spokesman said inspectors would remain on-site at Boeing factories during the strike.
White House press secretary Karine Jean-Pierre said at a press conference on Friday that the Biden administration has been in contact with both parties and has urged Boeing and the union to negotiate in good faith to reach a “solution that works for all involved.”
