Boeing faces strike of about 32,000 workers
International Association of Machinists union's contract with Boeing expires on Sept 12
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Aerospace giant Boeing is facing a new challenge in the form of a potential strike by 32,000 workers that could begin this month if the company and union are unable to reach an agreement.
Boeing's contract with the International Association of Machinists (IAM) is set to expire on Sept. 12, and the union's members, who build planes at Boeing facilities in the state of Washington, have threatened to go on strike if their demands aren't met.
In mid-July, the union's members approved a strike authorization vote with 99.9% in favor. Strike authorization votes are common during bargaining between unions and companies and don't necessarily mean that a strike will occur.
Boeing told FOX Business in a statement, "We remain confident we can reach a deal that balances the needs of our employees and the business realities we face as a company."
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About 32,000 members of the machinists union are threatening to strike at Boeing this month if a deal isn't reached for a new contract. (JENNIFER BUCHANAN/POOL/AFP via Getty Images)
IAM District 751 President Jon Holden said in a statement on Sunday that the union is "fighting for respect" from Boeing and that it's seeking "reasonable wage increases that reflect the value we bring and a retirement system that rewards our longevity and skill when we must put down our tools because we can't work any longer."
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| BA | THE BOEING CO. | 146.11 | +0.70 | +0.48% |
"Our proposals are not only reasonable but essential for stabilizing a company currently in free fall. While leaders come and go, it is IAM members who fabricate, drill, fasten, assemble, and test," Holden said. "It is our IAM members who move the parts, planes, and maintain the machines. We are the lifeblood of the factory. Never forget that there is no Boeing without the IAM."
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Boeing has faced several headwinds this year from in-air incidents to manufacturing quality issues and turnover in the CEO role. (David Ryder/Bloomberg via Getty Images)
The threat of a strike comes as Boeing has faced a particularly challenging year in the wake of the midair blowout of the door panel on a 737 Max 9 aircraft in January, which triggered a cabin decompression and prompted the airliner to turn back to Portland, Oregon, for an emergency landing.
The aftermath of that incident has prompted delays and pauses to its production line to address quality control problems while Boeing, the Federal Aviation Administration (FAA) and National Transportation Safety Board investigated the issues. Boeing also saw CEO Dave Calhoun step down from the role amid the controversy and be replaced by new CEO Kelly Ortberg.
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New Boeing CEO Kelly Ortberg looks to reach a deal with the IAM union to avoid a strike. (Daniel Acker/Bloomberg via Getty Images)
Anita Mendiratta, special adviser to the secretary general of United Nations Tourism and the author of "The Call to Leadership: Unlocking the Leader Within in Times of Crisis," told FOX Business the labor dispute poses an early challenge in Ortberg's efforts to change Boeing's culture.
"This is really putting Kelly Ortberg's ability to lead on the front line because, ultimately, if he wants to change the fate of Boeing in terms of its ability to recover in quality, in culture, in ability to serve its customers, rebuild trust in the business and the brand, and therefore to rebuild the bottom line, it's going to come down to production," Mendiratta said. "Strike action hits right at the heart of his ability to transform the culture of service and quality of those who work for Boeing, who, therefore, will then be the first domino to tip over the rest of the recovery process."
"What we also need to be conscious of and empathetic towards is that the people who represent Boeing, and that's over 150,000 U.S.-based employees, they've had four CEOs in the last 10 years," she added. "They have been continuously let down, so why should they believe Kelly is going to make a difference?"
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Mendiratta explained that Ortber is "facing the music" and has engaged with the FAA about regulatory issues and the IAM about the contract negotiations, showing that Boeing's leadership is taking their concerns seriously. She said that while he's "in a very delicate position," it also presents "a massive opportunity to demonstrate that leadership has changed."
Boeing's stock price is down more than 36% year-to-date and fell over 7.3% during Tuesday's trading session amid concerns about a potential strike.