3 days ago
Boeing Defense Workers Reject Contract in New Labor Turmoil
(Bloomberg) -- Boeing Co. faces the risk of a strike at its St. Louis defense hub after union workers rejected a contract offer that would boost their wages by 20% over four years.
The International Association of Machinists and Aerospace Workers Local 837, which represents 3,200 Boeing defense workers in Missouri and Illinois, voted overwhelmingly against the new terms Sunday.
The Boeing proposal 'fell short of addressing the priorities and sacrifices' of the company's skilled workforce, the union said in a statement. 'Our members are standing together to demand a contract that respects their work and ensures a secure future.'
While the present contract expires at 11:59 p.m. Central Time on Sunday, management still has a chance to win over rank-and-file members by sweetening its offer during a seven-day 'cooling off' period. If that's unsuccessful, IAM Local 837 workers will walk off the job and shut down manufacturing in Boeing's military aircraft hub.
The aerospace manufacturer is seeking to avoid another labor standoff after a strike by a Seattle-based Machinists union crippled manufacturing at its commercial jet factories for more than two months last year.
Boeing could not be immediately reached for comment.
Any labor strife would be costly for Boeing's defense division, which hasn't earned an annual profit since 2022 and is in the middle of a turnaround. A strike would shut down assembly lines for Boeing's F-15 and F/A-18 fighter jets, T-7A trainer, MQ-25 drone refueler and other weapons systems.
The labor uncertainty will be a focus for analysts when Boeing reports quarterly earnings on Tuesday. It's also a bellwether as GE Aerospace launches contract negotiations with a separate IAM local on Sunday.
St. Louis workers last went on strike in 1996 and don't have a history of activism, unlike Boeing's unions in the Pacific Northwest, according to Scott Mikus, an analyst with Melius Research.
Union members initially rejected management's offer during the last negotiation with Boeing in 2022, before accepting a three-year deal with a 14% general wage increase and cost-of-living adjustments.
While Puget Sound labor leaders endorsed Boeing's initial offer last year, they were rebuffed by rank-and-file members embittered by an earlier 10-year contract that stripped away pensions and locked in low wage increases while inflation soared.
The lengthy strike squeezed the company's working capital and spurred Boeing to sell equity worth almost $24 billion.
--With assistance from Bill Haubert.
(Updates with comments from labor union in third paragraph, attempt to reach Boeing in fifth paragraph.)
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