Boeing defense workers reject contract, announce first strike since 1996
What's the story
Boeing is preparing for a major strike at its St. Louis-area defense factories. The move comes after union members rejected the company's revised contract offer. The strike will see some 3,200 machinists walk off their jobs starting midnight today. This is the first such action since 1996 when a similar strike lasted for 99 days.
Union statement
Union members rejected deal promising 40% wage hike
The strike was called after union members voted against a deal that promised a 40% wage hike and increased retirement contributions. Tom Boelling, the top official of International Association of Machinists and Aerospace Workers District 837, stressed the need for a contract that reflects their members' skills, dedication, and critical role in national defense. The labor conflict will further intensify financial pressure on Boeing's defense and space division.
Financial impact
Strike to hit nearly 30% of Boeing's revenue
Boeing's defense and space division accounts for nearly 30% of the company's revenue as of Q2. Dan Gillian, a VP at Boeing and senior site executive in St. Louis, said they are ready for a strike with contingency plans to keep operations running through their non-striking workforce. The union members are responsible for building fighter jets such as the F-15, T-7 training jet, missiles and munitions at these factories.
Industry trend
Strike at Pratt & Whitney lasted 3 weeks
The strike comes amid a recent surge in activism at aerospace manufacturers, with unions gaining leverage amid shortages of highly skilled mechanics. Earlier this year, machinists struck for three weeks at Pratt & Whitney, leading to engine shortages at Airbus.
CEO remarks
Boeing CEO downplayed potential fallout from strike
Boeing's CEO Kelly Ortberg downplayed the potential fallout from a strike during the company's July 29 earnings call. He said, "The order of magnitude of this is much, much less than what we saw last fall." Both offers were the richest contracts Boeing has ever proposed for district members: average wages would increase to $102,600 from $75,000 for IAM 837 members.
Contract terms
Boeing warned it would withdraw $5,000 signing bonus
Boeing had also revised its 401(k) terms so that workers get the full contribution increase upfront instead of over three years. The company also warned it would withdraw a $5,000 signing bonus and wouldn't offer it again to workers if the contract isn't ratified by 11:59pm Sunday.