Workers at Boeing’s factories walked off the job early on Friday, stopping the manufacture of the company’s best-selling aircraft because the workforce had decisively rejected a new labor agreement.
For the manufacturer, which has had difficulty increasing output and repairing its reputation after safety issues, it is an expensive development.
A tentative 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 area voting against it. A two-thirds majority vote was needed for a work stoppage, but the workers’ 96% vote in favor of a strike was much higher.
IAM District 751 President Jon Holden declared, “We strike at midnight,” during a press conference where he also revealed the outcome of the vote. Claiming that manufacturing workers had endured “unlawful monitoring, forceful interrogation, discriminating behavior, and an unlawful benefit promise,” he described it as an “unfair labor practice strike.”
He stated that Boeing must negotiate honestly.
Boeing did not respond to his assertions.
The business released a statement saying, “The members’ obvious message was that they did not approve of the provisional deal we arrived at with IAM leadership.” “We’re prepared to return to the negotiating table in order to reach a new agreement, and we’re still committed to rebuilding our relationship with our workers and the union.”
Earlier this week, Stephanie Pope, the CEO of Boeing’s commercial airplane division, informed machinists that the tentative agreement was the “best contract we’ve ever presented.”
“To allow for a second vote to approve the contract, we ought to withhold anything,” she remarked, referring to previous negotiations. “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. He had pleaded with employees not to walk out of the contract the day before the vote, claiming that doing so would endanger the company’s ability to recover.
In an attempt to woo back workers after moving the 787 Dreamliner manufacturing to a nonunion plant in South Carolina, Boeing had committed under the terms of the tentative deal to manufacture its next commercial jet 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. During Friday’s premarket trade, Boeing shares dropped 4%.
Sheila Kahyaoglu, an aerospace analyst at Jefferies, calculated that a strike may cost Boeing $1.5 billion in cash over 30 days and warned that it “could destabilize suppliers and supply chains.” Had the tentative agreement been approved, she predicted that it would have had an annual impact of $900 million.
Boeing has incurred growing debt and has already spent approximately $8 billion this year. While the company 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.
Federal inspection of Boeing’s production lines has increased as a result of the almost new Boeing 737 Max 9 rupture at the beginning of the year.