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About 33,000 union members at Boeing Co. began striking on Friday after overwhelmingly rejecting a proposed four-year contract with the struggling aircraft maker.
The strike, the company’s first in 16 years, could cripple the U.S. economy by effectively halting commercial aircraft production at the nation’s largest manufacturer and largest exporter. Depending on the length of the strike, it could cause problems for about 10,000 Boeing (BA) suppliers across all 50 states.
The company has a total of 150,000 employees in the United States, directly and indirectly supports 1.6 million jobs and estimates its annual contribution to the U.S. economy at $79 billion.
The rejected deal, which International Association of Machinists (IAM) leaders described as the best they had negotiated with Boeing to date, would have provided pay increases of at least 25 percent over the life of the agreement.
Boeing has also committed to building its next commercial jet (not yet announced) in union factories, providing greater job security for union members. Without this contract clause, Boeing may decide to build the jet in a non-union factory.
However, 95% of IAM members voted against the agreement. In a separate vote, 96% voted in favor of authorizing the strike, comfortably clearing the two-thirds threshold required to authorize it. The strike began at 11:59 pm PST on Thursday.
“This is about fighting for our future,” John Holden, president of Boeing’s largest IAM chapter, said in announcing the vote. “We are always open to coming back to the bargaining table and moving forward on the issues that our members tell us are important.”
Boeing also said it was willing to return to the negotiating table to reach a new contract.
“The message was clear: the tentative agreement reached with IAM leadership is unacceptable to our members,” Boeing said in a statement. “We remain committed to rebuilding our relationships with our employees and the union.”
White House spokeswoman Robin Paterson said in a statement Friday that “Administration officials are in contact with Boeing and Machinist, and we encourage them to negotiate in good faith toward an agreement that provides employees with the benefits they deserve and strengthens the company.”
A vote against the contract was expected regardless of the proposal, after a series of problems at Boeing – including past concessions, job cuts and a move of some work from unionized assembly plants to its only non-union plant – had sparked widespread anger at the company.
“For many of us, this is a long time coming,” Jim Bloomer, a 28-year-old Boeing employee, told CNN affiliate KING-TV in an interview early Friday on the picket line outside the Renton, Washington, factory that makes the 737 Max.
“The reality is, we’re entitled to be paid more for what we do,” Bloomer said. “If Boeing is going to promote us as the best in the industry, they need to treat us as the best in the industry. When you have a $180 million airplane, labor costs are a tiny percentage of it.”
Bloomer said he and the other strikers are saving up money to see them through a long strike.
“We’ve known this was coming for years,” he said. “The warning signs were there. We’ve been treated unfairly. They’ve taken more from us than they’ve given.”
Earlier this week, Boeing’s new CEO, Kelly Ortberg, acknowledged that union members were unhappy with the terms of past contracts but urged them to get over that and vote in favor of the agreement.
“I know the reaction to our tentative agreement with IAM has been passionate,” he said in a letter to employees. “I understand and respect that passion, but I ask that you not let past setbacks cost you the opportunity to protect our future together.”
Ortberg said he wanted to “reset the relationship” with the union during his first week on the job last month. Holden told CNN late last month that he hadn’t seen a change in negotiating strategy since Ortberg took over, but said Thursday night that he didn’t necessarily blame the new boss for the strike.
“It’s hard to make up for 16 years,” he said. “This is what’s happened to our members at the hands of nearly two decades of company management.”
Despite years of problems, Boeing remains a major component of the U.S. economy, and the strike is just the latest blow to the company.
Over the past five years, Boeing has been plagued by a myriad of problems, some tragic, many embarrassing, most of them financially devastating.
Two fatal 737 MAX crashes in October 2018 and March 2019 killed 346 people and led to a 20-month grounding of Boeing’s best-selling jet and a halt to deliveries while it fixes design flaws linked to the crashes.
Boeing has since faced a series of questions about the quality and safety of its planes, scrutiny intensified after a door plug blew off on a 737 Max operated by Alaska Airlines shortly after takeoff on January 5. Although no one was killed or seriously injured, the incident sparked numerous federal investigations, one of which revealed that planes left Boeing factories without the four bolts necessary to secure the door plugs.
Boeing has since agreed to plead guilty to federal criminal charges for misleading the Federal Aviation Administration during its initial investigation of the MAX. As part of its agreement with the Department of Justice, the company must operate under the supervision of a court-appointed monitor.
The strike will not affect consumer travel — planes already delivered to airlines and Boeing planes currently in use around the world will continue to fly — but it will delay deliveries of promised jets to airlines and cut off Boeing’s main source of funding.
But the company hasn’t reported an annual profit since 2018, posted cumulative core operating losses of more than $33 billion through the second quarter of this year, and had its credit rating downgraded to near “junk” level.
Ratings agency Fitch warned on Friday that Boeing’s “room for a strike is limited,” adding that “a prolonged strike could have significant operational and financial impacts and increase the risk of a ratings downgrade.”
Even before the strike, production limits meant the company was not expected to return to profitability anytime soon. The company’s shares, which are part of the Dow Jones Industrial Average, opened down 2% in regular trading on Friday and were down slightly in afternoon trading.
Boeing shares have fallen more than 60% over the past five years and are down more than 30% since the Alaska Airlines crash earlier this year.
When Holden announced the tentative agreement on Sunday, he called it “the best deal we have ever negotiated in the history of our company,” but he has changed his comments in recent days following overwhelming backlash against the deal.
Holden told members in a message Tuesday that union leadership encouraged workers to approve the agreement as the best way to negotiate without a strike.
“We recommended accepting it because there is no guarantee that a strike would achieve more,” he said in the message, “but it is your decision and we will defend and support that decision no matter what. We have achieved all we could in negotiations outside of a strike and from here on out, the members must take over.”
At a press conference after announcing the results of the vote, Holden denied that union leadership had not represented the interests of its members when it recommended the deal that was later overwhelmingly rejected.
“The final decision belongs to our members, and we’ve left it up to them, which is exactly the way it should be,” he said. “Our members spoke loud and clear tonight, and I’m proud of our members, and I’m proud of them for standing up and fighting for more for each other, for their families and for their communities. There’s a lot at stake here for our members.”
Holden said it was difficult to pinpoint one reason why union members voted against the deal, acknowledging that workers wanted better job security, more vacation time and higher wages to make up for rising prices during the past few years of high inflation.
“I know many of our members have still not recovered from that wound,” he said, referring to the loss of traditional pension plans in recent deals.
“We went through a decade of stagnant wages,” Holden said. “We’ve had the same schedule for over 30 years, and our members are entitled to a fair work-life balance.”
The most recent strike at Boeing was in 2008 and lasted more than eight weeks. Holden said union members are willing to “not strike” for however long they want to get better conditions this time.
The US labor movement has been invigorated over the past year, especially as inflation has put pressure on workers’ pay. Nearly one million union members have won immediate wage increases of 10% or more between late 2022 and the end of 2023, according to a CNN analysis.
A strike at three unionized U.S. automakers began nearly a year ago and lasted seven weeks, the longest auto strike in 25 years. Holden said that motivated Boeing workers to take action.
“We’ve had a lot of great victories in the labor movement, and I think that momentum has helped us and given confidence to our members,” he said. “And that’s what we set out to do, so I hope that with tonight’s action we continue the success of the labor movement.”
This story has been updated with additional information.