Boeing factory workers strike for first time since 2008

BoeingAirbus factory workers went on strike just after midnight on Friday, halting production of the company's best-selling aircraft after employees overwhelmingly rejected a new labor contract.

This development is costly for the manufacturer, which has struggled to increase production and restore its reputation after safety crises.

Seattle-area and Oregon workers voted 94.6 percent to reject a temporary agreement announced Sunday by Boeing and the International Union of Machinists and Aircraft Workers. Workers voted 96 percent in favor of striking, far more than the two-thirds vote needed to stop work.

“We have decided to strike at midnight,” John Holden, president of the 751st District of the Factory Workers Union, announced at a news conference announcing the results of the vote. He described the strike as “an unfair strike in the field of labor,” claiming that factory workers had been subjected to “discriminatory behavior, forced interrogation, illegal surveillance, and we were promised illegal benefits.”

He said Boeing needed to negotiate in good faith. Boeing did not comment on his claims.

“The message was clear that the tentative agreement we reached with IAM leadership was not acceptable to members,” the company said in a statement. “We remain committed to resetting our relationship with our employees and the union, and we are prepared to return to the negotiating table to reach a new agreement.”

Boeing Commercial Airplanes CEO Stephanie Pope told machinists earlier this week that the interim deal was “the best contract we’ve ever offered.”

“In previous negotiations, the thinking was that we had to delay something so we could ratify the contract in a second vote,” she said Tuesday. “We talked about that strategy this time, but we deliberately chose a new path.”

The initial proposal included a 25% pay raise and other improvements to health care and retirement benefits, though the union had been seeking increases of about 40%. Workers have complained about the deal, saying it does not cover the rising cost of living.

The vote is a major blow to CEO Kelly Ortberg, who has been in the job for five weeks. A day before the vote, Ortberg urged workers to accept the contract and not strike, saying it would jeopardize the company’s recovery.

Under the tentative agreement, Boeing has pledged to build its next commercial jet in the Seattle area, in a bid to win back workers after the company moved production of the 787 Dreamliner to a non-union factory in South Carolina.

The deal, if approved, would be the first contract negotiated entirely with Boeing machinery workers in 16 years. Boeing workers went on strike in 2008 for nearly two months.

The ultimate financial impact of this strike will depend on how long it lasts.

Sheila Kahyaoglu, an analyst at Jefferies Aerospace, estimated the cash impact of a 30-day strike could be $1.5 billion in damage to Boeing, saying it “could destabilize suppliers and supply chains.” She predicted the interim agreement would have an annual impact of $900 million if it passes.

Boeing has spent about $8 billion so far this year, has piled on debt, and production has fallen short of expectations as the company works to eliminate manufacturing defects and faces other industry-wide problems such as supply and labor shortages.

Boeing's delays in aircraft deliveries have caused inconvenience to its airline customers. In response, the company said it had to redraw its hiring and growth plans. Southwest Airlines It has already sharply cut its forecast for Boeing deliveries this year.

“As a result, we currently have the fleet to meet our upcoming schedules,” a company spokesman said Friday. Company officials had been in contact with Boeing ahead of the vote.

The explosion of a door on a new Boeing 737 Max 9 jet earlier this year has increased federal scrutiny of Boeing's production lines.

“Our aggressive monitoring of Boeing continues,” the FAA said in a statement Friday.