Why Are More Than 30,000 Boeing Factory Workers Going On Strike?

Over 30,000 factory workers at the US plane manufacturer Boeing have stopped working, causing production of the 737 Max to come to a halt. The International Association of Machinists and Aerospace Workers (IAM) saw 96% of its members vote in favor of striking, with almost 95% rejecting the proposal.

Jon Holden, IAM District 751 president, remarked that the members had clearly expressed their stance. He emphasized that the issue was about respect, addressing past grievances, and fighting for the future.

Boeing responded by pledging to resume negotiations. They acknowledged that the tentative agreement previously reached with IAM leadership was not acceptable to the members and expressed their commitment to resetting their relationship with employees and the union, and to returning to the negotiation table for a new agreement.

Boeing facing series of setbacks

This industrial action is part of a series of setbacks for Boeing, which has struggled to recover from fatal crashes in 2018 and 2019. In January, a cabin panel on a 737 Max jet detached mid-air during a commercial flight, leading to increased regulatory and legal scrutiny.

In July, Boeing reported a larger-than-expected second-quarter net loss of $1.44 billion. Before the vote, recently-appointed CEO Kelly Ortberg urged workers to support the deal, warning that strike action could jeopardize the company’s recovery. The IAM had also recommended the offer to members, but dissatisfaction persisted, including concerns over senior management pay. Former CEO Dave Calhoun had earned nearly $33 million in 2023.

The offer that was rejected included a 25% pay increase over four years and Boeing’s commitment to build its next commercial plane in the Seattle region. However, the union had been seeking a 40% pay increase along with various other improvements to worker benefits.

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Boeing strike to impact US economy

The strike, the first at the company in 16 years, will nearly halt commercial airplane production at one of America’s largest manufacturing giants and its biggest exporter, potentially impacting the US economy. Depending on its duration, it could disrupt operations for nearly 10,000 Boeing suppliers across all 50 US states.

The company employs a total of 150,000 people in the US and estimates its annual contribution to the American economy at $79 billion, supporting 1.6 million jobs both directly and indirectly.

Jon Holden, president of the largest IAM local at Boeing, stated that the strike was about fighting for the future and emphasized the union’s commitment to addressing issues important to its members.

Boeing expressed its eagerness to return to negotiations, acknowledging that the tentative agreement was not acceptable to the members and reiterating its commitment to reset its relationship with employees and the union.

Past concessions and a series of issues at Boeing, including layoffs and shifting work from a unionized assembly plant to a non-union factory, had fueled widespread anger. Consequently, the vote against the contract was anticipated despite the offer’s contents.

Earlier in the week, Boeing’s new CEO Kelly Ortberg recognized that members were unhappy with past contract terms but urged them to overlook past frustrations and support the deal. He expressed a desire to reset the relationship with the union but noted that the company’s new leader was not necessarily to blame for the strike. Holden noted that the extensive problems faced over the past 16 years and the impact of company leadership over nearly 20 years were significant factors in the strike.

Boeing remains a crucial part of the US economy

Despite years of issues, Boeing remains a crucial part of the US economy. The strike represents just the latest challenge for the company. In the past five years, Boeing has faced numerous problems, some tragic and many embarrassing, which have been financially devastating.

Two fatal crashes of the 737 Max, one in October 2018 and another in March 2019, resulted in 346 deaths and led to a 20-month grounding of the plane to address a design flaw. The company then encountered further scrutiny over the quality and safety of its planes, heightened after a door plug blew off a 737 Max operated by Alaska Airlines, prompting multiple federal investigations.

Boeing has agreed to plead guilty to federal criminal charges for deceiving the FAA during the Max’s initial investigation. As part of its agreement, Boeing will operate under a court-appointed monitor.

While the strike will not affect consumer travel as delivered and currently in-use Boeing planes will continue flying, it will delay the delivery of jets to airlines, impacting Boeing’s primary revenue source. The company has not reported an annual profit since 2018, accumulating over $33 billion in core operating losses through the second quarter of this year, and its credit rating has dropped to near “junk” status. The company was not expected to become profitable soon due to production limits even before the strike.

Boeing shares tank down

Boeing’s shares have lost over 60% of their value in the past five years and more than 30% since the Alaska Air incident earlier this year.

Holden initially described the tentative agreement as “the best contract we’ve negotiated in our history.” However, the strong backlash led him to revise his comments in recent days. He had previously told members that union leadership recommended accepting the deal as the best achievable without a strike and emphasized that the decision was ultimately up to the members.

At a press conference following the vote announcement, Holden defended the union leadership’s recommendation, stating that the members had the final say and expressing pride in their decision to stand up for their needs. He acknowledged that members were seeking better job security, more time off, and higher wages due to rising prices and inflation.

Holden also highlighted the dissatisfaction with the loss of the traditional pension plan and the stagnation of wages over the past decade. He noted that members were prepared to strike as long as necessary to secure a better deal.

The recent wave of labor actions, including a significant strike by unionized US automakers that lasted seven weeks, has inspired Boeing workers. Holden noted that recent labor movement successes had given the union members confidence and motivated their current action.

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