Boeing Co. employees and supporters hold signs outside the Aerospace Machinists Union District 751 Hall ahead of a vote on the union contract in Renton, Washington, US, on Thursday, Sept. 12, 2024.
M. Scott Brauer | Bloomberg | Getty Images
Boeing‘s factory employees walked off the job after midnight on Friday, halting production of the corporate’s best-selling airplanes after staff overwhelmingly rejected a recent labor contract.
It is a costly development for the manufacturer that has struggled to ramp up production and restore its popularity following safety crises.
Employees within the Seattle area and in Oregon voted 94.6% against a tentative agreement that Boeing and the International Association of Machinists and Aerospace Employees unveiled Sunday. The employees voted 96% in favor of a strike, excess of the two-thirds vote required for a piece stoppage.
“We strike at midnight,” said IAM District 751 President Jon Holden at a press conference where he announced the vote’s results. He characterised it as an “unfair labor practice strike,” alleging that factory employees had experienced “discriminatory conduct, coercive questioning, illegal surveillance and we had illegal promise of advantages.”
He said Boeing must bargain in good faith.
Boeing didn’t comment on his claims.
“The message was clear that the tentative agreement we reached with IAM leadership was not acceptable to the members,” the corporate said in an announcement. “We remain committed to resetting our relationship with our employees and the union, and we’re able to get back to the table to succeed in a recent agreement.”
Stephanie Pope, CEO of Boeing’s business airplane unit, told machinists earlier this week the tentative deal was the “best contract we have ever presented.”
“In past negotiations, the considering was we should always hold something back so we will ratify the contract on a second vote,” she said. “We talked about that strategy this time, but we deliberately selected a recent path.”
A employee walks outside the Boeing Co. manufacturing facility in Renton, Washington, US, on Thursday, Sept. 12, 2024.
M. Scott Brauer | Bloomberg | Getty Images
The tentative proposal included 25% wage increases and other improvements to health-care and retirement advantages, though the union had sought raises of about 40%. Employees had complained concerning the agreement, saying that it didn’t cover the increased cost of living.
The vote is a blow to CEO Kelly Ortberg, who has been in the highest job for five weeks. A day before the vote, he had urged employees to simply accept the contract and never to strike, saying that it could jeopardize the corporate’s recovery.
Under the tentative agreement, Boeing had promised to construct its next business jet within the Seattle area, a bid to win over employees after the corporate moved the 787 Dreamliner production to a non-union factory in South Carolina.
The agreement, if approved, would have been the primary fully negotiated contract for Boeing machinists in 16 years. Boeing employees went on strike in 2008 for nearly two months.
The final word financial impact of this strike will rely upon how long it lasts. Boeing shares fell 4% in premarket trading Friday.
Jefferies aerospace analyst Sheila Kahyaoglu estimated a 30-day money impact from a strike might be a $1.5 billion hit for Boeing and said it “could destabilize suppliers and provide chains.” She forecast the tentative agreement would have had an annual impact of $900 million if passed.
Boeing has burned through about $8 billion to this point this yr and has mounting debt. Production has fallen in need of expectations as the corporate works to stamp out manufacturing flaws and faces other industry-wide problems akin to supply and labor shortages.
A blowout of a virtually recent Boeing 737 Max 9 at first of the yr has brought additional federal scrutiny of Boeing’s production lines.
