Aircraft assembly workers walked off the job early Friday at Boeing factories near Seattle after overwhelmingly rejecting a contract deal, halting production of the planemaker’s strongest-selling jet as it wrestles with severe output delays and heavy debt.
The workers’ first strike since 2008 comes as the planemaker is under heavy scrutiny from U.S. regulators and customers after a door panel blew off a 737 Max jet mid-air in January.
The mounting crises battered Boeing’s stock and sparked a leadership upheaval. Boeing shares fell 4% in U.S. pre-market trading on Friday. The stock has fallen nearly 38% since the start of 2024.
New CEO Kelly Ortberg was brought in just weeks ago to restore faith in the planemaker and had proposed a deal including a pay rise of 25% over four years, far lower than the 40% workers had demanded.
Workers also wanted to restore traditional pensions that were axed a decade ago but settled for an increase in new Boeing contributions of up to $4,160 per worker to employee 401(k) retirement accounts.
Roughly 30,000 International Association of Machinists and Aerospace Workers (IAM) members who produce Boeing’s 737 Max and other jets in the Seattle and Portland areas voted on their first full contract in 16 years, with 96% rejecting it and favoring a strike in a two-part ballot.
According to Boeing, the machinists make $75,608 per year on average, not counting overtime, which would rise to $106,350 at the end of the four-year contract.
The strike will not affect commercial flights but represents another setback for the aerospace giant, whose reputation and finances have been battered by manufacturing problems and multiple federal investigations this year.
“This is about respect, addressing the past and fighting for our future,” said Jon Holden, who headed the negotiations for Boeing’s largest union, before announcing the vote result on 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!”
‘Ready to get back to the table’
A prolonged strike could badly hit Boeing’s finances, which are already groaning due to a $60 billion debt pile.
Boeing said the vote sent a clear message late on Thursday that the tentative deal it reached with IAM leadership was unacceptable 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.
The proposed deal also included a $3,000 signing bonus and a pledge to build Boeing’s next commercial jet in the Seattle area, provided the program was launched within the four years of the contract.
“The key question now is on the duration of the strike given the gap between the proposed wage increase and union members request,” Jefferies analyst Chloe Lemarie said in a note, adding that a prolonged strike represents a key risk for 737 Max production levels.
Although IAM leadership recommended that its members accept the contract last Sunday, many workers responded angrily, arguing for the original demand 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.”
Multiple challenges
A strike presents Boeing with multiple challenges: it must 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 valuable, partially built planes without union workers to do the job.
The striking machinists assemble the 737 Max, Boeing’s best-selling airliner, along with the 777, or “triple-seven” jet, and the 767 cargo plane at factories in Renton and Everett, Washington.
Workers have been protesting all week in Boeing factories in the Seattle area.
The walkout will likely not stop the production of Boeing 787 Dreamliners, which were built by nonunion workers in South Carolina.
Shortly after midnight, striking workers started to gather outside the entrances of Boeing factories in the Seattle area.
People stood with signs reading, “Historic contract my ass!” and “Have you seen the damn housing prices?” Car horns honked and a boom box played songs such as Twisted Sister’s “We’re Not Gonna Take It” and Taylor Swift’s “Look What You Made Me Do.”
“I’m willing to strike for two months or even longer. Let’s go as long as it takes to get what we deserve,” said James Mann, a 26-year-old who works in a wings division at Boeing.
If prolonged, a strike would also weigh 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 Boeing’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 door 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,” Wilson said in an interview in Sydney.
According to a pre-vote note from TD Cowen, a 50-day strike could cost Boeing an estimated $3 billion to $3.5 billion of cash flow.
The Boeing workers’ last strike in 2008 shuttered plants for 52 days and hit revenue by an estimated $100 million per day.
S&P Global Ratings said that an extended strike could delay the planemaker’s recovery and hurt its overall rating. Both S&P and Moody’s rate Boeing one notch above junk status.
