By Joe Brock and David Shepherdson
SEATTLE (Reuters) – Workers at a Boeing Co. plant on the U.S. West Coast went on strike early on Friday after 96 percent of them voted to walk out, halting production of the company’s best-selling jetliner as it grapples with chronic production delays and mounting debt.
The first workers’ strike since 2008 began just weeks after new CEO Kelly Ortberg was appointed in August to restore confidence in the planemaker after a door panel on a new 737 Max nearly fell off mid-air in January.
Nearly 30,000 members of the International Association of Machinists and Aerospace Workers (IAM) who produce Boeing’s 737 Max and other aircraft in the Seattle and Portland areas voted on their first full contract in 16 years, overwhelmingly rejecting the deal in favor of a strike.
“It’s about respect, it’s about addressing the past, it’s about fighting for our future,” said John Holden, who led negotiations for Boeing’s largest union before the vote was announced Thursday evening.
“We will strike at midnight,” said the union leader who had agreed to the deal that had just been rejected, as members in the union hall cheered and chanted: “Strike! Strike! Strike!”
Boeing said late Thursday that the vote sent a clear message that the interim agreement it reached with IAM leadership was not acceptable to members.
“We are committed to resetting our relationship with our employees and unions, and we are ready to return to the table to reach a new agreement,” the aircraft maker said in a statement.
The deal included a 25 percent overall pay raise, a $3,000 signing bonus, and a pledge to build Boeing’s next commercial jet in the Seattle area, provided the program launches within the four-year contract.
Although the leadership of the construction workers’ union last Sunday recommended that its members accept the contract, many workers responded angrily, demanding the 40% wage increase they had initially demanded and expressing regret over the loss of the annual bonus.
“We’ll get back to the negotiating table as soon as we can,” Holden told reporters, without saying how long he expected the strike to last or when talks would resume. “This is something we’re taking day by day, week by week,” he added.
Multiple challenges
Workers have been protesting all week at Boeing factories in the Seattle area that assemble Boeing Max, 777 and 767 aircraft.
Boeing shares closed up 0.9% on Thursday before the vote results were announced but have fallen 36% this year on concerns about safety, production and its $60 billion debt burden.
The strike poses multiple challenges for Boeing: It will need to decide how to respond at the bargaining table, after saying it had offered everything it could. It will also have to find a way to secure factories full of highly valuable, partially completed planes without needing union workers to do the work.
In a letter to workers on Wednesday, Ortberg said that “a strike would jeopardize our shared recovery, further erode trust with our customers and harm our ability to shape our future together.”
If the strike is prolonged, it will not only affect Boeing’s finances, but also the airlines that depend on the company’s aircraft and its suppliers who make parts and components for their planes.
Air India Chief Executive Campbell Wilson said on Friday that deliveries of Boeing 737 Max jets to his airline appeared to be “a little behind” even before the strike was announced due to regulatory scrutiny after the Alaska Airlines crash and supply chain issues affecting the wider industry.
“There’s nothing official yet, but I think the indication or expectation is that it’s going to take some time,” he said in an interview in Sydney.
A 50-day strike could cost Boeing an estimated $3 billion to $3.5 billion in lost cash flow, according to a pre-vote memo from TD Cowan.
The last Boeing strike in 2008 closed factories for 52 days and affected revenue by about $100 million per day.
The prolonged strike could delay the planemaker’s recovery and hurt its overall rating, Standard & Poor’s Global Ratings said. Both S&P and Moody’s rate Boeing one notch above junk.
The White House did not immediately respond to a request for comment.
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