SEATTLE — Thousands of Boeing workers walked off the job Friday after resoundingly rejecting management’s contract offer, shutting down airliner production and threatening further damage to the aerospace giant as it struggles to overcome financial and safety problems.
The strike risks derailing Boeing’s recovery from a series of legal and regulatory crises and could cost the cash-strapped company an estimated $1 billion per week, according to analysts. Union members play key roles in assembling some of the company’s best-selling aircraft. Already, the company is being threatened with a downgrade of its credit rating.
The most direct impact is on Boeing’s assembly plants in Washington, especially in Everett and Renton. An extended work stoppage could also impact Boeing suppliers and possibly shrink its share of the aerospace market.
However, less than 24 hours into the strike, there appeared to be signs of progress.
On Friday evening, the Federal Mediation and Conciliation Service, an independent federal agency created by Congress to resolve conflict between employers and unions across industries, announced the two sides agreed to resume meetings next week with the help of a federal mediator.
Earlier on Friday, in remarks at an analysts’ conference, Brian West, Boeing’s chief financial officer, said the company is eager to return to the negotiating table, adding that new chief executive Kelly Ortberg, who spent time talking to workers on the factory floor this week, is working with his team to come up with a new offer.
West called the deal that members rejected “unprecedented” while acknowledging it fell short. The tentative contact would have included a 25 percent raise and improved health care and retirement benefits.
“Over the last few days, it became very clear, loud and clear … that the offer didn’t meet the mark and it was not acceptable,” he said.
Union members said they have been frustrated for years with Boeing’s tactics, including threats to move airliner production out of the region.
“I think this 96 percent spoke very loudly about what the workers want and what they’re not gonna settle for,” said Julie Dye, a 17-year Boeing employee who wore a shirt from the 2008 strike as she stood on a street corner near the company’s Renton factory, carrying a picket sign.
In California, Boeing workers on temporary assignment at a 737 Max storage facility in Victorville picketed Friday morning under the blazing desert sun, while inside the facility, managers and outside contractors continued maintenance and quality assurance work on aircraft.
Alex Mutch, a striking aircraft inspector, said he had been saving up for the strike since he was hired five years ago.
“We have been left hanging on a leash for almost 16 years and missed out on a lot of opportunities for cost-of-living adjustments, especially with the rate inflation has gone up,” Mutch said. “My grocery bill has doubled since I moved down here. Not to mention the cost of rent.”
A group of longtime Boeing machinists waving “On Strike Against Boeing” signs said while the deal offered solid wage gains for newer hires, they railed against the loss of their pensions in a contract negotiation in 2014.
For Robert Nesseth, a 36-year Boeing employee who has been on strike five times and temporarily lives in a nearby RV park while away from his family in Washington, said the cancellation of his pension translates to more than $1,000 less a month in benefits once he stops working.
“Our main thing is that over the last 15, 20 years, we’ve made a lot of concessions to the company because times were tough,” Nesseth said. “What Boeing is offering doesn’t let us catch up at all. The company really underestimates how much employees are tired of being used and abused.”
After a string of tense, marathon negotiating sessions over the past several weeks, the IAM and Boeing announced Sunday that they had reached a tentative four-year agreement. In a key provision, Boeing would commit to building its next new aircraft in Washington state, a major union demand.
Optimism, however, proved short-lived. On Monday, IAM President Jon Holden told the Seattle Times that members would probably reject the deal. Opposition grew as workers staged rallies and took to social media to vent their frustrations with the company’s offer. A copy of a flier obtained by The Washington Post urged members to “VOTE TO REJECT BOEING’S BAD DEAL,” circulated at many of the company’s plants. Machinists also were angered by the elimination of their annual bonus program.
Under the agreement, the average pay for machinists would have risen from $75,608 to $106,350 per year without overtime, according to the company. But workers said the offer failed to take into account the high cost of living in the Seattle region and the years that employees had gone without significant raises.
“Four years is not enough to make up for the last 16,” Boeing worker Roger Ligrano said before he voted. He said he was voting to strike, in part, to give union members more time to understand a deal.
The Biden administration is monitoring the situation. Acting Labor Secretary Julie Su has been in contact with both sides.
Dino Kritikos, managing director for Fitch Ratings, said the company has little room to maneuver.
“Boeing’s investment-grade credit rating has limited headroom for a strike,” he said. An extended strike beyond a week or two, he said, “could have a meaningful operational and financial impact, increasing the risk of a downgrade.”
The IAM strike in 2008, a 57-day walkout, cost Boeing about $1.5 billion a month, according to Moody’s.
Boeing has struggled to recover from major safety, financial and legal setbacks that began in January when a door panel of a 737 Max jet blew out of the fuselage in midair, leaving a gaping hole. Multiple investigations into the calamity uncovered serious shortcomings in the company’s manufacturing and safety oversight systems and led the Federal Aviation Administration to limit the number of 737 Max jets Boeing could build until it meets certain quality and safety milestones.
In May, the Justice Department announced that Boeing had failed to meet the conditions of an agreement that shielded the company from criminal prosecution in connection with a 2018 crash of a Boeing Max jet in Indonesia and a 2019 crash in Ethiopia that killed a combined 346 people. Boeing agreed to plead guilty to one count of criminal fraud in connection with the case — a settlement that must still be approved by a federal judge.
The company also has experienced major setbacks with its Starliner space program, which has been plagued by delays and cost overruns. The space capsule returned to Earth earlier this month, but without two astronauts it had carried to the International Space Station after NASA decided it was too risky to use the Boeing craft.
Ortberg, the former chief executive of Rockwell Collins, took over the top job last month, pledging a new beginning.
