Boeing workers begin strike after rejecting 25% pay raise

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Boeing mechanics have gone on strike after rejecting a deal negotiated by union leaders, halting production of the company’s jetliners in the latest blow to the struggling aerospace giant.

Members of the International Association of Machinists District 751, which represents approximately 33,000 Boeing aircraft Workers in Washington state walked off the job when their contract expired at midnight Thursday. Nearly 95 percent rejected the deal endorsed by their bargaining team on Sunday, and 96 percent voted to strike, easily exceeding the two-thirds majority needed to trigger a strike.

Many union members have taken to social media to express their anger, criticizing the deal and accusing IAM leaders of settling for too little. Many members are ready to strike, in part because of lingering anger over the 2014 deal that abolished defined benefit pensions.

“The message is clear: the interim agreement we reached with IAM leadership was not accepted by our members,” Boeing said in a statement. “We remain committed to reestablishing our relationship with our employees and the union, and we are ready to return to the negotiating table to reach a new agreement.”

The strike will limit Boeing’s ability to deliver planes, slowing the company’s cash flow after it reported an $8.3 billion outflow in the first half of the year. The company’s credit rating remains unchanged. one step above trashand avoiding a downgrade depends on the ability to generate cash from deliveries.

While a short-term strike could be “manageable,” S&P Global Ratings analyst Ben Tsocanos said “a prolonged strike would slow the company’s recovery and put pressure on the rating.”

Industrial action at a US national champion and key defense contractor could have implications into November presidential election. Candidates Kamala Harris and Donald Trump are looking to appeal to union voters, and while Washington is not a swing state, organized labor is a key constituency in swing states like Michigan and Pennsylvania.

District 751 leaders announced Sunday that they have reached a provisional agreement with the company. The deal includes a 25 percent wage increase, increased input on safety issues and, crucially, a guarantee that a new commercial jetliner will be built in Washington if it enters service in the next four years. That commitment is seen as essential to preserving jobs in the Puget Sound region after two decades of Boeing expanding operations at its union-free South Carolina factory.

A 25 percent increase is appropriate. Workers at Detroit’s Big Three have won. after they went on strike last fall.

But for the past eight years, machinists’ pay raises have been capped at 4 percent while inflation eroded their purchasing power. The pay increases stem from the same 2014 negotiations that eliminated workers’ pensions and where Boeing said it would move jobs out of the region unless the union made concessions.

District 751 members approved the deal by a vote of 51 percent to 49 percent, which the North American union leadership scheduled for a holiday when many protesters were out of town.

It was a blow to union members who have a track record of walking off the job to get their way at the bargaining table. Boeing mechanics 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 CEO Kelly Ortberg and Stephanie Pope, chief operating officer and head of commercial airplanes, have urged workers to accept the interim deal.

Pope wrote to employees on Tuesday acknowledging that Boeing had withheld its best offer until workers went on strike in previous negotiations.

“We deliberately chose a new path,” she said. “We did our best in our first bid to give you the reward and respect you deserved… Let me be clear: We did not hesitate to vote a second time.”

But mechanics may not believe Sunday’s deal is Boeing’s best offer, said Melius Research analyst Scott Mikus. Last year, mechanics at Spirit AeroSystems, a key aerospace supplier to Boeing, plan to buywon more concessions after the strike.

Trust between Boeing workers and executives remains at a decade-low after a former CEO joked on an earnings call that employees were “trembling” under his leadership.

“Labor knows they have a lot of leverage and they want their pound of flesh,” Mikus said. “I’m sure Boeing wants to reset its relationship with IAM and IAM staff in general, but there are probably still a lot of scars… It will take time to heal.”