Boeing faces possible strike on Friday amid discontent by some workers over tentative labor pact

By Allison Lampert

(Reuters) – Boeing (NYSE:BA) faces a possible strike as early as Friday if most of the U.S. planemaker’s factory workers in the Pacific Northwest vote on Thursday to back a work stoppage and reject a tentative deal that has enraged many of them.

Roughly 30,000 workers who produce Boeing’s 737 MAX, 767 and 777 jets in Portland, Oregon, and the Seattle area will vote on their first full contract in 16 years. A key union negotiator has acknowledged that many of the workers are angry because they wanted bigger wage hikes and other improvements. 

The path to a strike, however, is far from clear. According to the union, unless a two-thirds majority votes to strike, the deal is approved, whether or not a second vote focused on contract support passes.

Workers’ discontent with the tentative agreement reached on Sunday has been on display in some of Boeing’s Seattle-area factories, with employees holding marches, banging pots and pans and blowing horns this week, one worker told Reuters.

According to a note from TD Cowen, a 50-day strike could cost Boeing an estimated $3 billion to $3.5 billion of cash flow. The Boeing workers’ last strike in 2008 shuttered plants for 52 days and impacted revenue by an estimated $100 million per day.

“What I’m seeing is that there are a lot of angry people over many of the issues that they care deeply about,” said Jon Holden, who headed the negotiations for Boeing’s largest union, the International Association of Machinists and Aerospace Workers (IAM).

“We might see them vote this down and vote to go on strike,” Holden, president of the IAM’s district 751, said in an interview on Monday. 

The labor talks are a test for new Boeing CEO Kelly Ortberg, who met Holden after starting in August with a pledge to reset union relations, improve safety and ramp up production of Boeing’s best-selling 737 MAX passenger jet. Ortberg was at the planemaker’s Renton, Washington, plant on Wednesday to discuss the labor deal with workers, a source said. 

Boeing is carrying almost $60 billion of debt and facing scrutiny from regulators and customers, after a door plug on a near-new MAX blew off an Alaska Air (NYSE:ALK) jetliner while in mid-air in January. The planemaker’s shares have dropped 36.5% so far this year.

The proposed deal includes a general wage increase of 25%, a $3,000 signing bonus and pledge to build Boeing’s next commercial jet in the Seattle area, providing the program is launched within the four years of the contract.

Holden said workers want a wage hike closer to his opening position of 40% over three or four years, and that some are unhappy about the loss of an annual bonus that has averaged around 3.7% of earnings over the last 20 years.

Stephanie Pope, who heads the planemaker’s commercial airplanes division, told employees in a note on Tuesday that the agreement offers “guaranteed money,” since some workers had been concerned about how the previous bonus was paid out. 

“We bargained in absolute good faith with the IAM team that represents you and your interests,” Pope wrote. “Let me be clear: We did not hold back with an eye on a second vote.”

Younger, recent arrivals to Boeing are expected to play an outsized role in the vote due to demographic shifts since the pandemic which brought a wave of departures and retirements among older and more experienced workers, one industry source said.   

Of the more than 30,000 Boeing employees represented by District 751, roughly half have less than six years of experience, the union has said. That is double the level before the pandemic.

The deal, for example, offers a new parental leave plan for up to 12 weeks that Holden said exceeds anything mandated by current state laws in Washington and Oregon. 

The union also reduced the amount of mandatory overtime so workers would not be obligated to work consecutive weekends, an issue important to younger employees.  

“We did understand the demographics of our bargaining unit,” Holden said, adding that the deal also caters to longer-serving employees.  

Holden said he believed the tentative agreement was the best deal he could obtain in bargaining. “The power of our union is held by the members who have the right to vote on whether they will accept this or not.”