The latest challenge has surfaced for American planemaker Boeing (
BA), whose biggest labor union just voted overwhelmingly to
walk off the assembly line. A strike that started at midnight Pacific time will shut down production of its best-selling jets, including the 737, 777 and 767. An extended stoppage would weigh on the financials of Boeing and make things worse for the jetliner industry, which is already struggling with capacity shortages.
What happened? Tens of thousands of machinists (95%) rejected a labor deal struck between union leaders and Boeing executives. The contract offered a 25% wage increase over four years, as well as pledges for local manufacturing, more retirement benefits and lower healthcare costs, but employees felt that would not be enough after a decade of stagnating pay and the current cost of living. Prior to the vote, Boeing maintained that it offered as much as it could given to its finances, with a soaring debt load that has topped $60B.
It's the first big test for Boeing CEO Kelly Ortberg, who took the yoke last month to steer the company towards better brighter skies. The planemaker's reputation has suffered in recent years amid questions over safety and lack of accountability. Two crashes in 2018/19 uncovered design flaws with the MCAS system, a 737 MAX door plug blew out mid-flight in January, and more recently, Boeing's Starliner spacecraft couldn't make it back to Earth with
its crew on board.
A striking success: Unions and walkouts have notched strong results over the past year, as new leadership and members spot the opportunity for leverage. That has led to new labor agreements for the auto industry, for Hollywood, and even others
in the aerospace sector, like the machinists at Spirit AeroSystems (
SPR), which was
later bought by Boeing. Will the surge in industrial action impact even more industries? (
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