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Boeing (BA) machinists are on strike, and that puts Boeing in a bind. The company’s stock fell about 4% in Friday training because it needs them to put together its 737 Max planes, but the workers balked at a contract that offered them a 25% raise.
Their union, the International Association of Machinists and Aerospace Workers, said that 94.6% of them voted against the agreement. The workers had reportedly been seeking a 40% raise. Their corresponding 96% vote to subsequently go on strike was not a surprise, given that they had approved the tactic by an even larger margin in July.
The machinists are mostly represented by IAM District 751. Jon Holden, president of the district, telegraphed the vote results in an interview with the Seattle Times earlier this week.
“The response from people is it’s not good enough,” he said. “Right now, I think it will be voted down, and our members will vote to strike.”
Ahead of the vote, newly installed Boeing CEO Kelly Ortberg was begging them to okay the deal and stay on the job. They put together the 737 Max and 777 planes, which together account for 85% of the company’s current commercial airliner order backlog.
“I know the reaction to our tentative agreement with the IAM has been passionate,” he reportedly told the workers. “I understand and respect that passion, but I ask you not to sacrifice the opportunity to secure our future together, because of the frustrations of the past.”
The last time that Boeing’s IAM-represented workers negotiated a full contract was in 2008. They went on strike then, too, also because of pay. They were off the job for eight weeks, which the company said cost it $100 million at the time. Following the last strike, Boeing decided to move the construction for its 787 Dreamliner planes from the company’s traditional base in Washington state to South Carolina.
“It could not have been a revelation to IAM employees that strike-related costs and disruption might be considered when the Company was deciding what new investment was appropriate and where the investment should be made,” wrote Philip A. Miscimarra, the former chairman of the National Labor Relations Board, in a 2011 paper on the relocation for the ABA Journal of Labor & Employment Law.
But one of the major wins in the new contract was an assurance that Boeing would keep production of its next plane in Washington. Further relocation would be expensive — the planemaker spent $750 million building the new facility — and would not be a bulwark against future labor unrest. Although an IAM campaign in South Carolina failed with 74% of workers rejecting it in 2017, a smaller group of workers there did unionize the following year.
IAM 751 declined to comment on the vote or its next steps. In a statement provided to Quartz, Boeing acknowledged that all it can really do is restart talks and hope to come up with something more palatable.
“The message was clear that the tentative agreement we reached with IAM leadership was not acceptable to the members,” the company said. “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.”
