Boeing Co. (BA) is facing a crucial moment as its 33,000 aircraft assembly workers prepare to vote on a proposed contract. The decision could lead to a strike that would disrupt production of the company’s most popular aircraft.
The workers, members of the International Association of Machinists and Aerospace Workers (IAM), are voting on a contract that includes a 25% pay increase over four years. The voting process is taking place in union halls across Washington state, Portland, Oregon, and other locations. Results are expected by Thursday night.
If two-thirds of the workers reject the proposal and vote to strike, the work stoppage will begin at 12:01 a.m. PDT on Friday. This would mean a halt to production of the 737 Max, 777, and 767 models at factories in Everett and Renton, Washington, although production of the 787 Dreamliners in South Carolina would continue.
Boeing’s new CEO, Kelly Ortberg, has made a last-minute appeal to the workers, emphasizing that a strike would jeopardize Boeing’s recovery and erode customer trust. However, IAM District 751 President Jon Holden has predicted a strike, citing widespread dissatisfaction among workers.
The potential strike comes at a particularly challenging time for Boeing, which is already grappling with production delays and quality control issues. Just this week, Boeing announced a six-month delay in a key production milestone for its 737 MAX, pushing the target to March 2025. This delay follows earlier disruptions due to manufacturing defects affecting 737 MAX production.
The current situation is further complicated by a tentative labor agreement announced last Sunday, which sparked anger among union workers. While the agreement includes the 25% wage increase, it failed to address workers’ demands for better pensions and healthcare benefits, leading to widespread dissatisfaction.
Despite the tentative deal, Boeing’s shares saw a boost, but the sentiment remains cautious pending the outcome of the vote. A strike could have significant consequences, with aerospace analyst Cai von Rumohr suggesting it could last until mid-November, costing Boeing up to $3.5 billion in cash flow.
This situation highlights the complex challenges facing Boeing as it navigates a period of significant change. The company’s future hinges on the outcome of this crucial vote, with the potential for a strike casting a shadow over its recovery efforts.
