Boeing's largest labor union said its members had rejected the plane maker's contract offer and voted to strike.
Boeing’s largest labour union said its members had rejected the plane maker’s contract offer and voted to strike, but the union agreed to postpone a walkout for 48 hours to allow more time for negotiations.
The International Association of Machinists leadership announced the extension, which means Boeing employees will stay on the job until Friday, after saying that 87% of its members voted to start a strike at midnight on Wednesday.
If a deal for a new three-year contract is not reached by Friday, nearly 27 000 Boeing workers will start a strike that would cost the company about $100-million in revenue per day as customers’ planes sit idle on production lines.
Boeing shares fell 2,2% to $64.61 in early New York Stock Exchange trade.
Even though its workers voted overwhelmingly to strike, Boeing stopped short of promising anything specific or committing to improve on its last offer.
“We offered employees the best package of pay and benefits in the aerospace industry,” Doug Kight, Boeing vice-president and lead negotiator, said in a statement.
“The Federal Mediation & Conciliation Service has asked both parties to meet at a neutral location this week to explore whether an agreement can be reached,” Kight added.
The union leadership surprised rank-and-file members, who were preparing picket signs for a strike as the vote was being counted, with news of the postponement, drawing angry shouts from the crowd gathered at a Seattle union hall.
“There’s an awful lot of unhappy people. I don’t see a lot happening in the factory in the next couple of days,” said Hans Ulfstein (57) who works as a structural research mechanic at Boeing’s Everett, Washington plant.
“They [Boeing] better have a good screaming offer. If they don’t, it’s going to be a pretty long and nasty strike.”
A walkout would mark the fourth strike in 20 years for the International Association of Machinists and Aerospace Workers (IAM)—who are mostly based in Boeing’s commercial plane plants in the Seattle area.
A strike would put a dent in the US economy, swelling jobless claims and increasing inventories at major Boeing suppliers such as Spirit Aerosystems Holdings, Rockwell Collins and Goodrich.
If airlines are put off buying new planes, that would cut durable goods orders. A strike would also push back progress on the new 787 Dreamliner—key to Boeing’s financial future—which is already about 15 months behind schedule.
‘Best and final’
Boeing’s “best and final” contract offer includes wage increases of 5% for the first year and 3% for each of the remaining two years.
The company said those increases, along with new incentive plans, would add about $34 000 over the life of the contract to the pay of the average machinist, who makes about $55 000 a year before overtime or about $65 000 after overtime.
Boeing, which raised its initial wage-increase offer and took some controversial proposals off the table, also offered a one-time 6% lump sum payment and an additional $2 500 bonus if the contract was approved on Wednesday.
The IAM slammed the contract terms, saying the offer reduces benefits, shifts more health care costs onto workers, and does not address job security or outsourcing issues.
Union leaders encouraged members to reject the terms of the contract and vote in favour of a strike. A simple majority was sufficient to reject the contract, but more than two-thirds had to back a strike for it to go ahead.
“It looks like the union is flexing its muscles,” said Richard Aboulafia of the Teal Group aerospace consultants, surprised at the strength of the vote in favor of a strike.
“It virtually guarantees that Boeing is going to have to pay more, and feel some pain.”
The IAM has been preparing for the possibility of a strike for several months, advising members to save up for a lean period, taking their “burn barrels” out of storage and working out four-hour picket-line shifts for its members.
The union is offering to pay strikers a nominal $150 per week if a strike goes into a third week, but workers lose their normal healthcare coverage after a month.
Boeing strikes tend to be bitter but short. The IAM struck for 48 days in 1989, 69 days in 1995 and 28 days in 2005. In 2002, a contract was adopted by default after it was rejected by workers but not by enough to approve a strike.
Boeing risks alienating its workers and customers in the event of a strike, but is well-positioned to survive one. The Pentagon’s number two supplier and the world’s biggest-selling plane maker—topping Eads unit Airbus last year—made a record profit of $4,1-billion in 2007 and has a record $346-billion worth of work in its order book. - Reuters