Boeing Machinists Vote to Strike
Thursday, September 4, 2008; 10:06 AM
Boeing aircraft assembly workers last night voted to strike, threatening to paralyze the world's second-largest aircraft manufacturer at a time of booming business and likely further delaying delivery of the company's new fuel-efficient 787 commercial jet.
The more than 27,000 electricians, riveters, painters and others covered by the International Association of Machinists and Aerospace Workers overwhelmingly endorsed a union recommendation and voted to reject the company's final contract offer, which union officials said would jeopardize job security and impose higher health-care costs for workers.
The walkout was to begin at 12:01 a.m. Pacific time, but the expiring contract was extended 48 hours at the request of Washington Gov. Chris Gregoire and a federal mediator, the Associated Press reported.
Machinists District Lodge 751 President Tom Wroblewski and chief machinists' negotiator Mark Blondin said that if Boeing doesn't respond with an acceptable deal within 48 hours, the strike is on, the AP reported.
The battle at Boeing is seen as a crucial test for organized labor. Union leverage has diminished in recent years as competition for labor has expanded overseas, contributing to slower wage growth for most workers.
But the outcome of last night's vote indicated workers were willing to cast their lot with the union in spite of the vulnerability they face in a weak economy. Under union rules, last night's strike vote required a two-third's majority to pass. According to union officials, 80 percent of rank-and-file members voted to reject the contract and, in a separate ballot, 87 percent voted for a strike.
"The disrespect they have shown for the negotiation process is exactly the same way our members have felt and why they have been marching in the factories at lunchtime for the past weeks," the union said in a statement posted on its Web site early this morning.
Boeing had offered its workers, who earn about $56,000 a year before overtime, a three-year deal that includes as much as $5,000 in bonuses and an 11 percent wage increase, plus cost-of-living increases of 3 percent. The company also backed off a controversial proposal to replace its pension plan with a 401(k) for new workers. Still, the deal would require many workers to pay more for health-care coverage and include rules that union officials say would undermine job security. The union wants higher wage increases and job security guarantees, and it wants Boeing to hold the line on health-care costs.
"People feel that in a time of record profits, the company should not come with any takeaways," said Connie Kelliher, a union spokeswoman. "When times were bad, workers went for years without a salary increase. But now things are good."
Boeing officials have said that to offer more than it has would hamstring the company with unsustainable labor costs. "Our best and final offer rewards employees for the company's success and allows us to remain competitive," Boeing said in a statement before the vote results were announced.
Analysts say that although the company is determined to control its labor costs, a strike could be extremely damaging at a time when Boeing has $275 billion in airplane orders to fill and has posted robust profits, which topped $900 million in the second quarter of this year. Boeing is also competing for a $40 billion contract to build aerial refueling tankers for the Air Force. The contract could be worth as much as $100 billion as the Air Force replaces its fleet of tankers.
"Without a question, the company has drawn a line in the sand. . . . High labor and benefit costs can be a burden, but if there is a strike, the company could be doing more damage to itself if it disrupts production and progress on the 787 Dreamliner," said Harley Shaiken, a professor at the University of California at Berkeley who specializes in labor issues.
The 787 Dreamliner is about 18 months behind schedule, and a strike would only further slow progress, even as inaugural test flights are scheduled for this fall. Despite the delays, the company has orders for nearly 900 of the midsize planes, which Boeing says will save about 20 percent on fuel costs.
"Any further delay will have both a tangible and intangible effect," said Howard Rubel, an aerospace analyst at Jefferies & Co. "The tangible will be that the planes are even later. The intangible is, 'When do we regain the trust of this company?' " Rubel estimates that a strike would cost Boeing $120 million each workday in deferred revenue.
A strike would also have a potentially huge impact on the struggling U.S. economy. Aircraft sales have helped drive the nation's export boom, which has become a bigger part of business growth as other sectors have cooled. Boeing is the nation's No. 2 exporting firm, company officials said.
If Boeing workers end up striking, it would be the company's second walkout in three years. In 2005, workers launched a 24-day strike. That one was settled after Boeing boosted pension payments and backed off demands that workers pay more for health insurance.
"The neighbors of many Boeing workers are in very shaky shape, given the economy," Shaiken said. "Boeing is gambling that at least one-third of the workers will see that and vote for the contract. But this is a risky gamble, given the stakes."