More than 30,000 Boeing Workers announced a strike on Friday that may halt production of many of the company's aircraft after the workforce overwhelmingly rejected a brand new labor contract.
It is a costly development for the manufacturer, which has struggled to ramp up production and restore its popularity following safety crises.
Workers within the Seattle area and in Oregon voted 94.6 percent against a tentative agreement presented by Boeing and the International Association of Machinists and Aerospace Workers on Sunday. Ninety-six percent of staff voted in favor of a strike, excess of the two-thirds majority required for a piece stoppage.
“We're striking at midnight,” Jon Holden, president of IAM District 751, said at a press conference announcing the consequence of the vote. He called the strike an “unfair labor practices strike” and claimed the factory staff were “treated discriminatorily, coerced, illegally monitored and wrongfully promised benefits.”
He said Boeing must negotiate in good faith.
Boeing didn’t immediately comment, but Stephanie Pope, CEO of Boeing's industrial aircraft division, told engineers earlier this week that the preliminary deal was the “best contract we have ever presented.”
“In previous negotiations, the view was that we should hold back a little so that we could ratify the treaty in a second vote,” she said. “We talked about that strategy this time, but we deliberately chose a new path.”
The preliminary proposal included a 25 percent wage increase and further improvements in health and pension insurance, although the union had actually demanded a rise of around 40 percent. The staff had complained in regards to the collective agreement since it didn’t cover the increased cost of living.
The vote is a blow to CEO Kelly Ortberg, who has been in office for five weeks. The day before the vote, he had urged staff to simply accept the collective agreement and never to strike, saying that doing so would jeopardize the corporate's recovery.
Under the tentative agreement, Boeing had promised to construct its next industrial jet within the Seattle area to win over staff after the corporate moved production of the 787 Dreamliner to a non-union factory in South Carolina.
If the contract had been approved, it will have been the primary fully negotiated collective agreement for Boeing engineers in 16 years. Boeing staff went on strike for nearly two months in 2008.
The final financial impact of this strike will depend upon how long it lasts.
Sheila Kahyaoglu, an aviation analyst at Jefferies, estimated that a strike could cost Boeing $1.5 billion in financial damage inside 30 days, saying it “could destabilize suppliers and supply chains.” She predicted that the tentative agreement, if approved, would have an annual impact of $900 million.
Boeing has burned through about $8 billion to date this 12 months and is endlessly mired in debt. Production has fallen in need of expectations as the corporate tries to handle manufacturing deficiencies and faces other industry-wide problems resembling supplier and labor shortages.
A tire blowout on an almost latest Boeing 737 Max 9 earlier this 12 months has led to increased federal scrutiny of Boeing's production lines.
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