Boeing Strike Halts Production as Workers Reject Contract; Boeing Stock Plummets Amid Concerns
In a significant development, Boeing factory workers have launched a strike after overwhelmingly rejecting a proposed labor contract, halting production of the company’s bestselling airplanes. This is the first Boeing strike in 16 years, a move that could have serious financial and reputational consequences for the aerospace giant, which has already been grappling with safety issues, supply chain disruptions, and financial instability.
The Boeing strike began at midnight on Friday, after 33,000 machinists in Washington, Oregon, and California voted 94.6% against a tentative agreement that was presented to them earlier in the week. The rejected contract offered wage increases of 25% over four years, along with improvements to healthcare and retirement benefits. However, union members were demanding a 40% wage hike and the restoration of traditional pension plans, among other benefits.
The workers’ overwhelming rejection of the deal also authorized a strike with 96% support, well beyond the two-thirds vote required. “We strike at midnight,” said IAM District 751 President Jon Holden, speaking at a press conference where the results were announced. Holden characterized the walkout as an “unfair labor practice strike,” accusing Boeing of “discriminatory conduct, coercive questioning, unlawful surveillance, and an unlawful promise of benefits.”
Boeing’s leadership, visibly disappointed by the rejection of the contract, expressed its intent to return to negotiations. Boeing CFO Brian West, speaking at an investor conference, acknowledged the disconnect between the company’s management and its workers but emphasized the need for a new agreement that works for both parties. West warned that the Boeing strike would inevitably disrupt airplane deliveries and production, but did not provide specific financial estimates. Boeing has been struggling to ramp up production following the 737 Max crisis and multiple other safety concerns, making the strike an especially costly development.
Boeing stock tumbled nearly 4% following the strike announcement, with analysts predicting a significant financial hit if the strike is prolonged. Credit-rating agencies Moody’s and Fitch have both warned Boeing of potential downgrades if the strike continues for an extended period. Sheila Kahyaoglu, an aerospace analyst at Jefferies, estimated that a 30-day strike could cost Boeing as much as $1.5 billion, while a longer strike could destabilize the company’s supplier networks.
Fitch analysts noted, “Boeing has limited headroom for a strike,” highlighting the company’s existing financial challenges. Boeing has been burning through cash, and its stock has already lost over 60% of its value in the last five years. The Boeing strike adds to the growing list of issues threatening the company’s ability to recover from the setbacks of recent years.
The striking machinists are responsible for assembling Boeing’s flagship aircraft, including the 737 Max, the 777, and the 767 cargo planes. Workers on the picket line held signs reading, “Historic contract my ass” and “Have you seen the damn housing prices?” as they voiced frustrations about stagnated wages, rising costs of living, and past concessions. Car horns honked in solidarity while protestors played Twisted Sister’s “We’re Not Gonna Take It” and Taylor Swift’s “Look What You Made Me Do.”
The machinists currently earn an average salary of $75,608 per year, not including overtime. Under the proposed contract, this would have risen to $106,350 by the end of the four-year deal. However, many workers felt that the contract failed to address their key concerns, particularly given inflation and the loss of pensions in previous contracts.
“We’ve been treated unfairly. They’re taking away more than they’re giving us,” said Jim Bloomer, a 28-year Boeing employee. “If Boeing touts that we’re the best in the industry, they need to treat us like the best in the industry.”
Many union members were also upset that Boeing had moved production of its 787 Dreamliner to a non-union facility in South Carolina, further contributing to the lack of trust between the company and its workforce.
Kelly Ortberg, who took over as Boeing CEO just five weeks ago, now faces a major challenge in his efforts to rebuild the company’s strained relationship with its employees. Ortberg had urged workers to accept the contract, warning that a Boeing strike would jeopardize the company’s recovery. In his final plea before the vote, Ortberg stated, “No one wins in a walkout,” but his efforts to prevent the strike were unsuccessful.
Ortberg’s tenure has already been marked by numerous setbacks, including Boeing’s financial losses, safety crises, and production shortfalls. The strike is likely to exacerbate these problems, especially as the company has not turned a profit since 2018 and continues to face a downgraded credit rating. Boeing’s accumulated operating losses have exceeded $33 billion since 2019, further complicating efforts to steer the company back to profitability.
The Boeing strike is expected to have significant ramifications beyond the company itself. Boeing’s extensive supply chain, which includes nearly 10,000 suppliers across all 50 U.S. states, could experience disruptions as the strike halts airplane production. These disruptions could impact airlines that rely heavily on Boeing jets, such as Southwest Airlines, which has already adjusted its delivery expectations due to Boeing’s ongoing production delays.
In addition to financial concerns, the Federal Aviation Administration (FAA) has stated that it will continue to monitor Boeing’s operations closely during the strike. This follows renewed scrutiny of Boeing’s manufacturing practices after multiple safety incidents, including a door plug blowout on a 737 Max earlier this year.
Boeing and the International Association of Machinists and Aerospace Workers have both expressed their willingness to return to the negotiating table, but it remains unclear how long the strike will last. Analysts have speculated that the strike could extend well into November, given that workers’ $150 weekly payments from the union’s strike fund may not seem adequate as the holiday season approaches.
While Boeing has promised to build its next commercial jet at its unionized factories in Washington state, the current impasse has cast doubt on its long-term production plans. The strike could also erode further trust between Boeing and its customers, many of whom have already faced delays in receiving aircraft due to previous production issues.