Boeing assembly line employees are prepared to halt work, potentially paralysing production throughout the airplane manufacturer’s Seattle industrial centre. This follows the largest union’s members turning down a contract proposal and opting to strike. This marks the first strike since 2008 by the district of the International Association of Machinists and Aerospace Workers, which represents 33,000 Boeing employees across the western United States. This adds even more pressure on the company, which is already struggling with the aftermath of quality control issues that led to a near-disaster in early 2024, triggering investigations, customer backlash and upper management changes.
Boeing’s new CEO, Kelly Ortberg’s call for calm was disregarded by members who also ignored their own union leaders’ advice to agree to conditions which involved a guaranteed wage rise of 25% over a four-year period. Whilst this is the biggest wage increase ever proposed by the aerospace manufacturer, workers anticipated a considerably larger increment. Equally upsetting for them was the abolition of an annual bonus.
The rejection by the workforce means Boeing and IAM District 751 will have to return to discussion in an effort to arrive at an agreement that appeases the union members known for their history of activism. Analyst Cai von Rumohr from TD Cowen calculates that the strike could persist for more than 50 days, similar to past incidents, cutting Boeing’s cash flow by between $3 billion to $3.5 billion.
Whilst Boeing maintains that it has done its best considering its strained financial situation, it has yet to articulate a response plan. However, there have been reports that managers are scouting other employees in an attempt to identify those capable of standing in for the striking IAM members temporarily.
In the run-up to the decision being made late in the evening, IAM members outside of Boeing’s Renton factory, where it produces 737 Max jets, expressed dissatisfaction with the proposed deal and vented their frustrations about seeing salaries stagnate under a long-term agreement reached in 2014 which also culminated in the abolition of pensions.
Since an accident in January exposed shortcomings in its factories, prompting a cutback in production, Boeing has been under significant financial strain. Consequently, the company is on the brink of losing money and its credit rating is just a notch above junk status, making its hefty $45 billion (€40.6 billion) debt even more challenging to manage.
They are also irritated that the company has maintained a regulation mandating that employees on an hourly wage must serve for six years before they attain the topmost pay grades. “To make ends meet, I’m compelled to work ridiculous amounts of overtime,” expressed Zachary Haley, an inspector for the 737’s quality assurance at Boeing, who has completed five years with the company.