Boeing workers strike as 25% pay rise rejected

Boeing workers have gone on strike after they overwhelmingly rejected a tentative deal between union representatives and the plane maker that included a 25% pay rise.

More than 30,000 workers in Seattle and Portland downed their tools from midnight Pacific Time (07:00 GMT) on Friday.

The walkout is another setback for the firm, which is facing deepening financial losses.

It is also struggling to repair its reputation after a series of safety issues, including two fatal crashes.

The strike will be a major blow for Boeing’s new chief executive Kelly Ortberg, who was appointed last month with a mission to turn the business around.

Almost 95% of the union members – who produce planes including the 737 Max and 777 – voted in the ballot rejected the pay deal.

Of those who voted, 96% back strike action until a new agreement is reached.

“Our members spoke loud and clear tonight,” said Jon Holden, president of the International Association of Machinists and Aerospace Workers (IAM) District 751.

“We strike at midnight.”

Boeing said in a statement: “The message was clear that the tentative agreement we reached with IAM leadership was not acceptable to the members.

“We remain committed to resetting our relationship with our employees and the union, and we are ready to get back to the table to reach a new agreement.”

The walkout is a severe blow to Boeing and an embarrassment for Mr Ortberg, who had made a last-ditch plea to workers before the vote, warning that a strike would put the company’s “recovery in jeopardy”.

The question now is how long it will go on for. Boeing seems ready to get back to the table.

But there is an obvious breakdown in trust between management and the workforce – and equally between the workforce and the union leadership, who had said this was the best contract it had ever negotiated and had urged members to accept the deal.

As well as a 25% pay rise over four years, the preliminary agreement that workers rejected included a commitment from Boeing to build its next commercial plane in the Seattle area if the project started during the lifetime of the contract.

The union had initially targeted a number of improvements to workers’ packages, including a 40% pay rise.

On the face of it, it is hard to see a quick solution unless Boeing capitulates.

Analysts say an extended shutdown could cost the company and its suppliers billions.

The current contract between Boeing and the unions was reached in 2008 after an eight-week strike.

That walkout cost the company about $1.5bn (£1.14bn) a month, according to credit rating agency Moody’s.

In 2014, the two sides agreed to extend the deal, which expired at midnight on Thursday.

“It’s never a good time for a strike, at least from the perspective of management, the current situation makes it even more problematic,” said Greg Waldron, Asia Managing Editor at aviation news website FlightGlobal.

“Still, a great deal will depend on how long the strike lasts. Airline CEOs with 737 Maxes on order will be watching this closely,” Mr Waldron added.

Mr Ortberg’s appointment came as Boeing found itself in a deepening crisis over its safety record. His predecessor Dave Calhoun had announced in the spring that he would step down.

In July, Boeing agreed to plead guilty to a fraud charge and a criminal fine of nearly $244m in connection with the fatal crashes of two of its 737 Max planes more than five years ago.

It is also facing other lawsuits and probes after a mid-air blowout in January of a door plug on a new plane flown by Alaska Airlines.

On top of mounting financial losses, the plane maker has had to slow down its assembly lines due to a 737 Max production cap imposed by the US Federal Aviation Administration.