After rejecting a 25% pay raise over four years, Boeing machine operators decide to go on strike.
Boeing's machinists decided to go on strike on Thursday, which is another blow to the company's already damaged finances and reputation.
Boeing now risks a production halt for its best-selling commercial aircraft. According to the Worldwide Association of Machinists and Aerospace Workers, 96% of voting employees supported the strike, easily above the two-thirds threshold, while 94.6% of workers rejected the deal, which would have increased compensation by 25% over four years.
The 33,000 machinists planned to go on strike at a few seconds past midnight on Friday morning.
"This is about battling for our future, respecting the past, and honoring our district," IAM District 751 President Jon Holden declared as he made the vote announcement. In response, Boeing said it was "prepared to return to the negotiating table to reach a new agreement."
"It was made quite evident that the members did not approve of the provisional arrangement we came to with IAM leadership. The corporation released a statement saying, "We remain dedicated to resetting our connection with our staff members and the union."
Not much has gone right for Boeing this year; in January, a panel burst, leaving a massive hole in one of its passenger planes, and NASA chose to keep two men in orbit instead of returning them home on a spaceship beset with issues.
Boeing will not be able to get the much-needed money it receives from delivering new aircraft to airlines as long as the strike continues. That will provide another difficulty for Kelly Ortberg, the company's new CEO, who took over the role six weeks ago. Her task was to turn around a business that had fallen behind Airbus, a rival in Europe, and had lost more than $25 billion in the previous six years. Ortberg made a desperate attempt to save a contract that the union's negotiators unanimously supported. He informed the machinists on Wednesday that “no one prevails in” in a walkout and that a strike would jeopardize Boeing's comeback and increase the company's negative perception among airline passengers.
It is no secret that Boeing is going through a challenging time, partly as a result of our own past missteps," he stated.
"If we work together, I'm confident we are capable of getting back on the right path, but a strike would jeopardize our recovery as a team, further undermining our ability to build trust with our customers and decide our future jointly."
Employees weren't in the mood to talk. According to Holden, Ortberg was in a tough spot since machinists are resentful of their stagnant pay and the health care and pension compromises they have made since 2008 in order to keep the company from outsourcing employment.
He remarked, "It's difficult to make up for 16 years."
Holden and the union negotiations, who suggested that employees accept the contract offer, were also chastised by the vote. Holden, who foresaw that employees would vote to go on strike, stated that the union will poll members to determine what concerns they would like to emphasize when talks pick back up.
All week long, union members voiced their dissatisfaction with the agreement on social media, frequently calling for greater pay increases. A group of several dozen people marched to a union hall close to Boeing's 737 Max plant in Renton, Washington, on Thursday, waving posters advocating for a strike and blowing whistles.
As you can see, there is unity here, stated quality-assurance employee Chase Sparkman. "I want my connection brothers and sisters to stand together, arm in arm, and tell our company that we demand better," the speaker said. Without overtime, the machinists' yearly salary is $75,608, which Boeing estimates will increase to $106,350 at the conclusion of the four-year contract.
The agreement, however, did not meet the union's initial goal for 40% wage increases spread over three years. The union ultimately agreed to enhance Boeing's payments to employees' 401(k) retirement plans in lieu of restoring the traditional pensions that were eliminated ten years ago.
Adam Vogel, a Boeing employee, described the 25% rise as "a load of crap." Our last raise came sixteen years ago. Another quality-assurance worker with 16 years of Boeing experience, Broderick Conway, stated the organization can afford more. Many members are rather displeased with our initial offer.
Hopefully, the second offer is what we're after," he remarked. "We're going to keep striking and advocating for ourselves if not." This week, Stephanie Pope, the chief of Boeing's commercial aircraft division, made an effort to dissuade blue-collar employees from believing that going on strike would lead to a better offer from the business.
"We engaged in negotiations with the IAM team, who stands up for you and your rights, in the purest good faith," she declared. Let me say this clearly: We didn't wait for a second vote. Voting was held in a number of sites, including union halls in Portland, Oregon, and Washington state.
By agreeing to locate the next generation of Boeing aircraft in the Puget Sound region if workers approved the deal, Boeing thought it was providing a substantial advantage to the union.
The 737 Max would be replaced by that aircraft, which is not anticipated to arrive until the 2030s. For union officials, who hope to prevent a repeat of Boeing's decision to shift Dreamliner production from the Seattle region to South Carolina, it was a significant victory.
At plants in Renton and Everett, Washington, close to Seattle, the strike will halt manufacturing of the 737 Max, Boeing's most popular aircraft, as well as the 777, or "triple-seven," jet and the 767 freight plane. The Boeing 787 Dreamliners, which are constructed in South Carolina by nonunion laborers, are probably not going to be impacted.
Prior to the vote, Cai von Rumohr, an aerospace analyst at TD Cowen, stated that given the past two Boeing strikes, which occurred in 1995 and 2008, it is reasonable to assume that a walkout would continue until mid-November, at which point the workers' $150 weekly payments from the union's strike fund might seem inadequate given the approaching holidays.
According to von Rumohr, Boeing receives roughly 60% of the sale price when it provides a plane to the customer, so a strike that length would lose the business up to $3.5 billion in cash flow. Holden informed members on Monday that the union had exhausted all possible avenues for negotiation and suggested accepting the agreement "because we can't guarantee we can achieve more in a strike." However, a large number of the general public still remembered the salary, health care, and pension cuts. They're angry. They want a great deal of goods. Von Rumohr, the aerospace analyst, stated, "I think Boeing realizes that and intends to fulfill a fair number of them." "The question is: Will they go above and beyond?"
Since two 737 Max aircraft crashed in 2018 and 2019, killing 346 people, Boeing's credibility has suffered. Following the January flight of a Max during which a panel blew out, the safety of its goods came under increased scrutiny. Furthermore, it is also dealing with a strike that can push it farther behind competitor Airbus in Europe in terms of new airplane orders and shipments.
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