Boeing’s┬аU.S. West Coast factory workers walked off┬аthe job┬аearly on Friday after 96 per cent┬аvoted in favour┬аof a strike, halting production of the planemaker’s strongest-selling jet as it wrestles with chronic output delays and mounting debt.
The workers’ first strike since 2008 began┬аjust weeks after new┬аCEO Kelly Ortberg┬аwas brought on in August to restore faith in the planemaker after a┬аdoor panel blew off┬аa nearly new 737 MAX jet in mid-air in January.
Roughly 30,000┬аInternational Association of Machinists and Aerospace Workers (IAM) members┬аwho produce┬аBoeing’s 737 MAX and other jets in the Seattle and Portland areas voted on their first full contract in 16 years,┬аoverwhelmingly rejecting the deal and favouring a strike.
“This is about respect, this is about addressing the past and this is about fighting for our future,” said Jon Holden, who headed the negotiations for┬аBoeing’s largest union, before announcing the vote result┬аon Thursday evening.
“We strike at midnight,” said the union leader who had agreed to the just-defeated deal, as members in the union hall cheered and chanted: “Strike! Strike! Strike!”
Boeing┬аsaid late on Thursday the vote sent a clear message that the tentative deal it reached with IAM leadership was not acceptable to members.
“We remain committed to resetting our relationship with our employees and the union, and we are ready to get back to the table to reach a new agreement,” the planemaker said in a statement.
The deal included a general wage increase of 25 per cent, a $3,000 signing bonus and a pledge to build┬аBoeing’s next commercial jet in the Seattle area, provided the program was launched within the four years of the contract.
Although IAM leadership recommended last Sunday that its members┬аaccept the contract, many workers had responded angrily, arguing for the originally demanded 40-per-cent┬аpay rise and lamenting the loss of an annual bonus.
“We’re going to get back to the table as quickly as we can,” Holden told reporters, without saying how long he thought the strike would last or when talks would resume. “This is something that we take one day at a time, one week at a time.”
Boeing shares down
Workers have been protesting all week in┬аBoeing┬аfactories in the Seattle area that assemble┬аBoeing’s MAX, 777 and 767 jets.
Boeing┬аshares closed up 0.9 per cent┬аon Thursday before the vote results were announced but are down 36 per cent┬аthis year on concerns over safety, production and a $60-billion debt burden.
A strike presents┬аBoeing┬аwith multiple challenges: it will need to decide how to respond at the bargaining table, after saying it had offered everything it could. It also must find a way to secure factories full of extremely valuable, partially built planes without union workers to do the job.
A letter to workers on Wednesday, Ortberg said “a strike would put our shared recovery in jeopardy, further eroding trust with our customers and hurting our ability to determine our future together.”
If prolonged, a┬аstrike would weigh not only on┬аBoeing’s financials, but on airlines that depend on the planemaker’s jets and suppliers who manufacture parts and components for its aircraft.
Air India CEO Campbell Wilson said on Friday that┬аBoeing’s 737 MAX deliveries to his airline appeared to be “delayed a little bit” even before the strike announcement because of regulatory scrutiny after the Alaska Airlines incident and supply chain issues affecting the broader industry.
“There’s nothing official yet, but I think the indication is, or the expectation is, that it’s going to be a little bit later,” he said in an interview in Sydney.
According to a pre-vote note from TD Cowen, a 50-day strike could cost┬аBoeing┬аan estimated $3 billion to $3.5 billion of cash flow.
The┬аBoeing┬аworkers’┬аlast strike┬аin 2008 shuttered plants for 52 days and hit revenue by an estimated $100 million per day.
