Boeing workers have initiated a strike after overwhelmingly rejecting a proposed deal between union representatives and the company, which included a 25% pay increase. Over 30,000 employees in Seattle and Portland walked off the job starting at midnight Pacific Time (07:00 GMT) on Friday.
This strike poses another major setback for Boeing, which is already grappling with financial difficulties and a tarnished reputation following safety issues, including two fatal crashes. The dispute adds further pressure on the company’s new CEO, Kelly Ortberg, who was appointed last month with the task of revitalizing the business.
Nearly 95% of union members, responsible for building aircraft like the 737 Max and 777, rejected the pay deal in a vote, with 96% supporting strike action until a new agreement is reached. Jon Holden, president of the International Association of Machinists and Aerospace Workers (IAM) District 751, stated, “Our members spoke loud and clear tonight. We strike at midnight.”
Boeing’s Chief Financial Officer, Brian West, told investors that the impact of the strike depends on how long it lasts, as production of the company’s popular 737 planes has come to a halt. He cautioned that the strike “will jeopardize” Boeing’s recovery efforts but stressed that the company is eager to rebuild its relationship with workers and secure a deal. “We want to return to the negotiating table and reach an agreement that benefits our employees, their families, and our community,” West said.
The strike represents a significant blow for Boeing and a personal setback for CEO Ortberg, who had urged workers to avoid a strike, warning that it would endanger the company’s recovery. The focus now shifts to how long the strike will continue. Boeing appears willing to resume talks, but there is a clear breakdown in trust between the company, its workforce, and the union leadership, which had encouraged members to accept the deal, calling it the best contract they had ever negotiated.
In addition to the 25% pay raise over four years, the rejected agreement included a pledge from Boeing to build its next commercial aircraft in the Seattle area if the project commenced during the contract period. Initially, the union had aimed for a 40% wage increase.
West acknowledged a “disconnect” in the negotiations and said that CEO Ortberg was personally involved in seeking a resolution. Analysts predict a prolonged strike could cost Boeing and its suppliers billions, with shares in the company falling after credit rating agency Moody’s warned the situation could lead to a credit downgrade.
The last strike between Boeing and the unions occurred in 2008 and lasted eight weeks, costing the company approximately $1.5 billion per month. In 2014, both parties extended the deal, which expired at midnight on Thursday. Aviation expert Greg Waldron pointed out that while strikes are always challenging for management, the current timing makes it even more problematic, especially for airlines awaiting deliveries of the 737 Max.
Ortberg’s leadership comes at a time of crisis for Boeing, as the company continues to face legal and financial repercussions from safety failures. In July, Boeing agreed to plead guilty to fraud and pay a $244 million fine related to the crashes of two 737 Max planes. Additional lawsuits and investigations are ongoing, including one concerning a mid-air incident involving a new Alaska Airlines plane.
Despite recent efforts to ramp up production and meet a 737 Max output limit set by the U.S. Federal Aviation Administration, the strike has stalled progress. West expressed optimism that production could quickly return to pre-strike levels but admitted, “I don’t know when.”
