Aircraft assembly workers went on strike on Friday at Boeing factories in Washington, Oregon and California after union members overwhelmingly rejected a tentative contract that would have increased wages by 25 per cent over four years.
The work stoppage involving 33,000 machinists will not disrupt commercial flights immediately but was expected to shut down production of Boeing’s best-selling airliners, presenting another setback for a company already dealing with a damaged reputation and financial losses.
Boeing stock was down 2.2per cent in morning trading, bringing its loss for the year so far to 38.9 per cent.
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The strike started less than three hours after the regional branch of the International Association of Machinists and Aerospace Workers said that 94.6 per cent of voting workers had rejected their bargaining committee’s recommendation to approve the proposed contract and 96 per cent had supported walking off the job.
Shortly after midnight, workers stood outside the Boeing factory in Renton, Washington, with signs reading, “Historic contract my ass” and “Have you seen the damn housing prices?” Car horns honked and a boom box played songs such as Twisted Sister’s We’re Not Gonna Take It and Taylor Swift’s Look What You Made Me Do.
Several workers were upset by a recent company decision to change the criteria on which annual bonuses are paid.
Many said they considered the wage offer inadequate given how much the cost of living in the Pacific Northwest has increased. Toolmaker John Olson, 45, said he had received a two per cent raise during his six years at Boeing.
“The last contract we negotiated was 16 years ago and the company is basing the wage increases off of wages from 16 years ago,” Olson said.
“They don’t even keep up with the cost of inflation that is currently happening right now.”
The machinists make $75,608 per year on average, not counting overtime, and that would have risen to $106,350 by the end of the proposed four-year contract, according to Boeing.
However, the offer fell short of the union’s initial demand for pay raises of 40 per cent over three years. The union also wanted to restore traditional pensions that were axed a decade ago but settled for an increase in new Boeing contributions to employee 401(k) retirement accounts of up to $4160 per worker.
Under the rejected contract, workers also would have received $3000 lump sum payments and a reduced share of health care costs. In addition, Boeing had met a key union demand by agreeing to build its next new plane in Washington state.
The head of the union local, IAM District 751 President Jon Holden, said the union would survey members to decide which issues they want to stress when negotiations resume. Boeing responded to the strike announcement by saying it was “ready to get back to the table to reach a new agreement.”
“The message was clear that the tentative agreement we reached with IAM leadership was not acceptable to the members. We remain committed to resetting our relationship with our employees and the union,” the company said in a statement.
Very little has gone right for Boeing this year, from a panel blowing out and leaving a gaping hole in one of its passenger jets in January to NASA leaving two astronauts in space rather sending them home on a problem-plagued Boeing spacecraft.
The striking machinists assemble the 737 Max, Boeing’s best-selling airliner, along with the 777 jet and and the 767 cargo plane. The walkout likely will not stop production of Boeing 787 Dreamliners, which are built by non-union workers in South Carolina.
As long as the strike lasts, it will deprive the company of much-needed cash it gets from delivering new planes to airlines.
That will be another challenge for new Boeing CEO Kelly Ortberg, who six weeks ago was given the job of turning around a company that has lost more than $US25 billion ($37.2 billion) in the last six years and fallen behind European rival Airbus.
Ortberg made a last-ditch effort to salvage a deal that had unanimous backing from the union’s negotiators.
He told machinists on Wednesday that “no one wins” in a walkout and a strike would put Boeing’s recovery in jeopardy and raise more doubt about the company in the eyes of its airline customers.
“For Boeing, it is no secret that our business is in a difficult period, in part due to our own mistakes in the past,” he said.
“Working together, I know that we can get back on track, but a strike would put our shared recovery in jeopardy, further eroding trust with our customers and hurting our ability to determine our future together.”
Ortberg faced a difficult position, according to union leader Holden, because machinists were bitter about stagnant wages and concessions they have made since 2008 on pensions and health care to prevent the company from moving jobs elsewhere.
“This is about respect, this is about the past, and this is about fighting for our future,” Holden said in announcing the strike.
Depending on how long the strike lasts, the suspension of airplane production could prove costly for the beleaguered Boeing. An eight-week strike in 2008, the longest at Boeing since a 10-week walkout in 1995, cost the company about $100 million daily in deferred revenue.
Before the tentative agreement was announced on Sunday, Jefferies aerospace analyst Sheila Kahyaoglu estimated a strike would cost the company about $US3 billion ($4.5 billion) based on the 2008 strike plus inflation and current airplane-production rates.
Solomon Hammond, 33, another Renton toolmaker, said he was prepared to strike indefinitely to secure a better contract.
Boeing’s offer “just doesn’t line up with the current climate. The wages are just too low,” Hammond said.
“I make $47 an hour and work paycheck to paycheck. Everything costs more.”
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