Boeing union members voted down a collective bargaining agreement in favor of a strike

Members of Boeing Co. 's largest union have voted to reject a preliminary agreement on a new labor contract, setting the stage for a strike starting at midnight Friday that could severely disrupt production at Boeing's commercial aircraft manufacturing center in Seattle.

It was the first strike since 2008 by IAM District 751 of the International Association of Machinists and Aerospace Workers, Boeing's largest union, which represents 33,000 employees. The strike will add to Boeing's woes. Since a near-catastrophic accident in early 2024, Boeing's aircraft quality problems have triggered regulatory investigations, customer protests and executive changes.

Union members voted overwhelmingly in favor of a strike, with 94.6 percent of workers voting against the new offer and 96 percent voting in favor of a strike, well above the two-thirds affirmative threshold needed for a strike, Bloomberg reported. The workers ignored calls for peace from Boeing's new chief executive, Kelly Ortberg. Mr Otberg has vowed to rebuild industrial relations.

Union members also objected to the terms of the deal recommended by union leaders, which included guaranteed pay increases of 25 percent over four years. While the proposed pay increase is the largest in Boeing's history, workers had expected a bigger increase and were angry about a provision that eliminated annual bonuses.

Reuters reported that Boeing's labor and management began negotiations in March this year, and workers argued that pay increases could not keep up with the rising cost of living, and asked management to renew the contract. On Sept. 8, Boeing and IAM reached a preliminary agreement to raise wages by 25 percent over the next four years, reduce health care costs for workers, reduce forced overtime, and provide benefits such as 12 weeks of paid parental leave.

"A lot of people are angry about a lot of issues that they care deeply about," said Jon Holden, head of negotiations for the International Association of Machinists and Aerospace Workers.

The strike is expected to affect production of Boeing's 737 MAX, 767 and 777 models at two assembly plants in Seattle and Portland. Financial services firm TD Cowen reported that a 50-day strike could cost Boeing about $3 billion to $3.5 billion. The last time Boeing workers went on strike, in 2008, it shut down the factory for 52 days and cost an estimated $100 million a day in lost revenue.

Reuters pointed out that if the workers strike for a long time, Boeing's production capacity will be hit, further delay the delivery of aircraft, affect suppliers and related industries, making Boeing's financial situation worse.

A passenger jet accident on Jan. 5 plunged Boeing into a quality crisis, forcing the company to slow production. Since then, Boeing has been in financial trouble and its credit rating is just one notch above speculative grade, putting it in a tough position as it deals with a crushing debt load of $45 billion.