Boeing’s strike halts airplane production at key plants

Thousands of Boeing workers went on strike Friday after overwhelmingly rejecting a contract their union negotiated, a potentially costly disruption to the aerospace giant as it tries to recover from a series of safety crises.

The strike, the first at Boeing in 16 years, brought airplane production to a halt in the Seattle area, home to most of Boeing’s commercial plane manufacturing. The slowdown could also disrupt the company’s supply chain.

Boeing plays a substantial role in the U.S. economy. It employs almost 150,000 people across the country — nearly half of them in Washington state — and is one of the nation’s largest exporters. The company, which also makes military jets, rockets, spacecraft, and Air Force One, is a global symbol of America’s manufacturing strength.

The White House said Friday that it was in touch with Boeing and the union, the International Association of Machinists and Aerospace Workers. “We encourage them to negotiate in good faith — toward an agreement that gives employees the benefits they deserve and makes the company stronger,” Robyn Patterson, a White House spokesperson, said in a statement.

Boeing’s stock tumbled 3.7% on Friday and has fallen nearly 40% this year. The company’s debt rating is also in jeopardy.

Brian West, Boeing’s chief financial officer, said at a conference Friday that the strike would affect production, deliveries, and operations, and would “jeopardize our recovery.”

“We want to get back to the table,” West added.

Union leaders and company management had reached a tentative contract agreement on Sunday after months of talks. Union leaders said it was “the best contract we’ve negotiated in our history.” But it fell short of what the union initially sought, including bigger raises, and it was rejected on Thursday by 95% of the membership.

A vast majority of the 33,000 workers governed by the contract are represented by District 751 of the machinists’ union, Boeing’s largest, and mostly work on commercial airplanes in the Seattle area. The dispute also involves workers in the Portland, Oregon, area who are represented by the union’s smaller District W24.

The union represents about one-fifth of the company’s more than 170,000 employees worldwide.

“This is about respect. This is about addressing the past, and this is about fighting for our future,” said Jon Holden, the president of District 751.

Holden had said in a statement several days before the strike that union leaders had recommended approving the deal because “we can’t guarantee we can achieve more in a strike.” He added that the union would “protect and support” whatever decision the members make.

Kelly Ortberg, the company’s new CEO, had urged employees to approve the deal. “A strike would put our shared recovery in jeopardy, further eroding trust with our customers,” he said in an email to workers on Wednesday.

Ortberg, who joined Boeing last month, has sought to reset the company’s relationship with its workers and met with employees in the Seattle area this week to hear their thoughts about the deal. Other pressing issues include improving quality and safety, restoring the company’s reputation, fixing its relationship with regulators and improving its financial position, which includes reducing its nearly $60 billion in debt.

Ratings firm Moody’s said Friday that it was reviewing Boeing for a downgrade in light of the potential impact of the strike. The plane maker’s rating is currently just one rung above the “junk” speculative grade.

The last Boeing strike, in 2008, lasted 50 days; the contract that ended the dispute has been extended twice. If the current strike lasts about as long, it would cost Boeing at least $3 billion, according to an estimate from Cai von Rumohr, a research analyst at the investment bank TD Cowen.

Boeing operates two large factories in the Seattle area: one in Renton, where it makes the 737 Max, and another in Everett, where it makes the 767 and 777.

The Max, by far Boeing’s most popular model, accounts for more than three-fourths of the 5,490 planes the company has on order. But output at the Renton factory is far behind what Boeing wants. The company has been forced to slow production to make quality improvements after a panel fell off a Max being used for an Alaska Airlines flight in January. Eventually, Boeing plans to expand Max production to Everett.

The rejection of the proposal Thursday reflects resentment among workers over concessions made in past talks, including the loss of pension benefits a decade ago, which the union had sought to reinstate. Workers and the union were also angered by the company’s decision in 2020 to consolidate production of its 787 Dreamliner at a nonunion factory in South Carolina.

But many in the union were not around for those events: About half the members of District 751 have less than six years of experience at the company. Those workers generally earn less than their more experienced peers, which may make a strike financially difficult, even with the union’s offer to pay members $250 per week starting in the third week of the strike.

The proposed deal would have delivered raises of 25% over the life of the four-year contract; the unions started the talks by asking for raises of 40%. Some workers who started from a lower base wage would have received bigger raises; for about 7,500 workers, pay would have increased by 45%, while another 5,000 workers would have received raises of 53%, according to Boeing.

Boeing said the tentative contract would have raised the average salary for a machinist, excluding overtime, from nearly $76,000 to roughly $106,000 over four years.

The rejected deal also would have provided each union member with a $3,000 ratification bonus. Boeing had also agreed to increase annual payments to the union 401(k) plan by up to $4,160 per worker, cover more of the cost of health care, provide 12 weeks of paid parental leave, and make improvements to work-life balance, including reductions in mandatory overtime. The company also agreed to build its next commercial plane in the Pacific Northwest if such an effort were undertaken in the life of the contract.

In rejecting the deal, workers may feel they have an upper hand as Boeing seeks to move past the crisis that began when the panel fell off a 737 Max. While no one was seriously injured in that incident, it reignited concerns about the quality and safety of Boeing’s planes five years after two fatal Max crashes led regulators worldwide to ground the plane for nearly two years.

After the January episode, the Federal Aviation Administration limited production of the Max. The company has since increased inspections added training for new hires, started to simplify procedures, and limited tasks performed out of sequence, a practice known as traveled work.

Boeing’s employees may also have been more willing to vote for a strike because they were emboldened by recent walkouts involving autoworkers, screenwriters and actors.

This article originally appeared in The New York Times.