Boeing employees decisively rejected a new labor deal, prompting more than 30,000 of them to go on strike on Friday, stopping the manufacture of the majority of the company’s airplanes.
For the firm, which has had difficulty increasing output and repairing its image after safety issues, it is an expensive development.
A preliminary agreement revealed on Sunday by Boeing and the International Association of Machinists and Aerospace Workers was met with 94.6% of votes from workers in Oregon and the Seattle region voting against it. A two-thirds majority vote was needed for a work stoppage, but the workers’ 96% vote in support of a strike was far higher.
IAM District 751 President Jon Holden said, “We strike at midnight,” during a news conference where he also revealed the outcome of the vote.
Claiming that manufacturing workers had endured “discriminatory conduct, coercive questioning, unlawful surveillance, and we had unlawful promise of benefits,” he described it as a “unfair labor practice strike.”
He stated that Boeing must negotiate honestly. The CEO of Boeing’s commercial aircraft division, Stephanie Pope, told machinists earlier this week that the tentative agreement was the “best contract we’ve ever presented.” Boeing did not immediately respond to requests for comment.
“In past negotiations, the thinking was we should hold something back so we can ratify the contract on a second vote,” she added. “This time, we discussed that tactic, but we purposefully took a different route.”
Although the union had demanded rises of almost 40%, the tentative plan includes upgrades to health-care and retirement benefits in addition to salary increases of 25%. Employees have expressed dissatisfaction with the deal, claiming that it failed to account for rising living expenses.
Kelly Ortberg, the CEO, has lost her position after just five weeks in office as a result of the vote. A day before the vote, he had urged workers to accept the contract and not to strike, warning that it would threaten the company’s recovery.
In an attempt to win back workers after moving the 787 Dreamliner manufacturing to a non-union plant in South Carolina, Boeing had committed under the terms of the tentative deal to manufacture its next commercial plane in the Seattle region.
If accepted, the deal would have been the first fully negotiated contract that Boeing machinists had received in sixteen years. In 2008, Boeing employees went on strike for about two months.
The length of this strike will determine its final financial impact.
Sheila Kahyaoglu, an aerospace analyst at Jefferies, calculated that a strike may cost Boeing $1.5 billion in cash over a 30-day period and warned that it “could destabilize suppliers and supply chains.” Had the tentative deal been approved, she predicted that it would have had an annual effect of $900 million.
Boeing has incurred growing debt and has already spent approximately $8 billion this year. While the firm attempts to eliminate manufacturing defects and deals with other issues facing the sector as a whole, such as labor and supply shortages, production has fallen short of expectations.
Since the beginning of the year, a virtually new Boeing 737 Max 9 had a rupture of the door plug, which has increased federal monitoring of Boeing’s manufacturing lines.
