Boeing Factory Workers Walk Off Job After Rejecting Contract

Boeing's factory workers in the Seattle area and Oregon went on strike early Friday, halting production of the company's best-selling airplanes after overwhelmingly rejecting a new labor contract.

• Workers voted 94.6% against a tentative agreement between Boeing and the International Association of Machinists and Aerospace Workers (IAM).
• 96% of workers voted in favor of a strike, well above the required two-thirds majority.
• The IAM District 751 President Jon Holden alleged unfair labor practices, including discrimination, coercive questioning, and unlawful surveillance.

Boeing's Struggle to Ramp Up Production and Restore Reputation

The strike is a costly development for Boeing, which has been struggling to ramp up production and restore its reputation following safety crises.

• Boeing's CEO Kelly Ortberg had urged workers to accept the contract, saying a strike would jeopardize the company's recovery.
• The tentative agreement included 25% wage increases and improvements to health care and retirement benefits, but workers found it insufficient to cover the increased cost of living.
• The agreement also promised to build Boeing's next commercial jet in the Seattle area, a bid to win over workers after moving 787 Dreamliner production to a non-union factory in South Carolina.

Financial Impact of the Strike

The financial impact of the strike on Boeing will depend on its duration, with analysts estimating a potential $1.5 billion hit for a 30-day strike.

• Boeing shares fell 4% in premarket trading on Friday.
• Jefferies aerospace analyst Sheila Kahyaoglu forecasted the tentative agreement would have had an annual impact of $900 million if passed.
• Boeing has burned through about $8 billion so far this year and has mounting debt.

Supply Chain Disruptions and Federal Scrutiny

The strike could destabilize suppliers and supply chains, exacerbating existing industry-wide problems such as supply and labor shortages.

• Production has fallen short of expectations as Boeing works to stamp out manufacturing flaws.
• A blowout of a nearly new Boeing 737 Max 9 earlier this year has brought additional federal scrutiny of Boeing's production lines.