Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Boeing’s rank-and-file machinists have voted to strike, rejecting a deal negotiated by union leaders and putting pressure on the aircraft manufacturer to offer more generous terms.
Members of the International Association of Machinists District 751, which represents about 33,000 Boeing workers in Washington state, will walk off the job when their contract expires at midnight on Thursday night. Almost 95 per cent rejected the deal endorsed by their bargaining team on Sunday and 96 per cent voted to strike, easily exceeding the two-thirds majority needed to trigger a walkout.
Many of the union’s members expressed anger on social media, criticising the deal and accusing IAM leaders of settling for too little. Many members had been ready to strike, partly fuelled by residual anger from a 2014 deal that eliminated defined-benefit pensions.
The strike will limit Boeing’s ability to deliver planes, slowing its cash flow after it reported an $8.3bn outflow during the first half of the year. The company’s credit rating stands one notch above junk, and avoiding a downgrade depends on its ability to generate cash from deliveries.
While a short strike would be “manageable”, S&P Global Ratings analyst Ben Tsocanos said “an extended strike would delay the company’s recovery and put pressure on the rating”.
The industrial action at a US national champion and key defence contractor could have ramifications for November’s presidential election. Candidates Kamala Harris and Donald Trump are seeking to appeal to union voters, and while Washington is not a swing state, organised labour is an important constituency in states that are, such as Michigan and Pennsylvania.
District 751 leaders announced on Sunday that they had reached a tentative deal with the company. The agreement included a 25 per cent wage rise, increased input on safety issues and, critically, guarantees that a new commercial jetliner would be built in Washington if it is launched in the next four years. That commitment was seen as essential to preserving jobs in the Puget Sound area after two decades in which Boeing has expanded work at its non-union factory in South Carolina.
The 25 per cent increase is in line with what workers at Detroit’s Big Three carmakers won after they went on strike last autumn.
But for the past eight years the machinists’ pay increases have been capped at 4 per cent while inflation eroded their buying power. The raise stemmed from the same 2014 negotiation that eliminated workers’ pensions and where Boeing said it would move work away from the region unless the union made concessions.
District 751’s membership approved that deal in a 51 per cent to 49 per cent vote that the union’s North American leadership scheduled over a holiday period when many opponents were out of town.
It was a blow for union members who have a record of walking off the job to achieve their aims at the bargaining table. Boeing’s machinists have gone on strike seven times since 1948. After Sunday’s tentative agreement, some members on social media accused union leaders at the regional level of betraying them.
Boeing chief executive Kelly Ortberg and Stephanie Pope, chief operating officer and head of the commercial planes business, had urged workers to accept the tentative deal.
Pope wrote to employees on Tuesday acknowledging that Boeing had withheld its best offer until after workers went on strike in past negotiations.
“We deliberately chose a new path,” she said. “We put our best foot forward on the first offer to give you the reward and respect you deserve . . . Let me be clear: We did not hold back with an eye on a second vote.”
But the machinists may not believe Sunday’s deal represented Boeing’s best offer, said Melius Research analyst Scott Mikus. Last year machinists at Spirit AeroSystems, a key aerospace supplier that Boeing plans to buy, won additional concessions after going on strike.
Trust between Boeing workers and executives remains low a decade after a former chief executive quipped during an earnings call about employees “cowering” under his leadership.
“Labour knows that they have a lot of leverage, and they want their pound of flesh,” Mikus said. “I am sure Boeing wants to reset its relationship with the IAM and its employees more broadly, but there is probably a lot of scar tissue . . . It will take time to heal.”
