Manufacturer looks certain to miss full-year target after union votes to reject ‘best and final’ offer, hurting suppliers

The damaging machinists’ strike that has halted production of all Boeing commercial airliners except the 717 looked set to continue into its second week as Flight International went to press, with no sign of a breakthrough.

Boeing 737 Big

Boeing declines to comment on the cost of the strike to date in terms of lost revenue, disruption or aircraft production, but has revealed that the most recently rejected union proposal would have cost the manufacturer an extra $1 billion over the next three-year contract period.

Production of at least 10 aircraft was believed to have been lost by 9 September, with the prospects of continuing action making it virtually certain that Boeing will miss its 320-unit year-end delivery target.

The effects of the strike are already being felt throughout the supply chain, particularly at Spirit AeroSystems in Wichita, Kansas, where 75% of the 737 airframe is made. The site, which also supplies significant structures for the 747, 767 and 777 programmes, was expected to go to a three-day working week from 12 September.

Engine maker General Electric and joint-venture company CFM International are also reacting quickly to the strike. Production and deliveries of GE90, CF6 and CFM56 engines will continue at normal rates to the end of September, says GE. “However, if the strike continues, we will build at the same rate in October and November, but we will begin storing engines rather than shipping them to Boeing.”

The strike, which began on 2 September, was called by members of the International Association of Machinists and Aerospace Workers (IAM), who rejected Boeing’s “best and final” contract offer over pension, pay and benefits. IAM Local 751, 86% of whose members voted to reject the offer, says Boeing must accede to its demands for a 33%-plus increase in the pension multiplier, plus a multi-million-dollar contribution to its own pension plan and a 50% increase in Boeing’s “VIP” savings plan match. The union says it will reopen negotiations with Boeing “any time, any place”.

Commercial Airplanes president Alan Mulally says: “When union negotiators say the two sides were ‘miles apart’, they are correct. Having barely moved off their original positions, union negotiators were demanding more than $1 billion more than what was in our best and final offer. Their positions did not reflect the current market for pay and benefits and far exceeded any recent contract settlements in the industry.”

Mulally says meeting the union demands would have “eroded our ability to compete. It was a bridge too far for our bargaining team and our business plan.”

The last time Boeing was hit by IAM strike action was in 1995 when workers voted to return to work after a 68-day stoppage that halted deliveries of more than 30 airliners and suspended production of a similar number.


Source: Flight International