The 6,000 union members of the International Association of Machinists (IAM) voted Wednesday night in Wichita, Kan., to reject the “last, best and final offer” from Spirit AeroSystems, Boeing’s largest airframe supplier.
A strike is set to begin a minute after 12 a.m. Friday.
With 79% voting to reject the contract and 85% voting to strike if it was rejected, the outcome easily met the two-thirds vote required.
In response, Spirit preemptively suspended production at the start of first shift Thursday, telling IAM members not to come to work. They will be paid until the strike officially starts.
In a statement, the IAM said that its members at Spirit “worked without fail during tumultuous times, including a pandemic that saw everything grind to a halt.”
“Most of our members have concluded that the company’s offer is unacceptable,” the statement said.
Spirit makes the fuselage for Boeing’s 737 MAX, and on every Boeing jet it makes the forward fuselage including the cockpit. It makes a variety of other structural parts for the wings and engine pylons.
Production of new jets in Everett and Renton could quickly halt if the strike lasts more than a few days. That risks another major setback for the 737 MAX and 787 programs that have endured repeated halts recently due to quality defects.
Boeing issued a statement saying: “We continue to monitor the situation and support our valued supplier.”
Stan Deal, Boeing Commercial Airplanes CEO to all his employees Thursday morning asking them to stay focused on building airplanes and promising to update them as more information came in from Spirit.
Mechanics in the Seattle area may have to transfer to repairing the store of undelivered 787 and MAX airplanes stuck in inventory due to quality defects.
Spirit is also a supplier to Airbus. Though most of that work is done elsewhere, Spirit does make some parts for the small A220 jet in Wichita, including some systems, strut-to-wing hardware and the aft fairing package.
The rejection of the contract came as a surprise, as last Friday the IAM District 70 negotiating committee unanimously recommended approval of the offer.
The offer included a 16% pay raise over four years, “up to a compounded 34% average pay increase” over that period with cost-of-living adjustments and a guaranteed annual bonus.
The offer also gave a 14.7% increase in retirement benefits and an agreement to end mandatory overtime on Sundays.
On Thursday, announcing the result of the strike vote, the leadership of IAM District 70 said it “will regroup and begin planning the following steps to bring the company back to the table.”
That may happen quickly. Spirit management issued a statement with conciliatory language indicating a willingness to talk.
“We know that no one wins in a work stoppage; however, we respect the rights of our represented employees,” the management statement said. “Despite this setback, we are not distracted from the task at hand. We look forward to continued meetings with IAM leadership.”
In a note to investors Thursday, analyst Ken Herbert of RBC research wrote, “With increased production rates planned across both Boeing and Airbus, Spirit is likely to feel increased pressure to get a contract signed as soon as possible.”
Kristine Liwag, an analyst with Morgan Stanley, told investors: “This is a worst-case scenario for both Spirit and the overall aerospace industry.”
With Spirit struggling financially from the impacts of prolonged 737 and 787 delivery halts in addition to the pandemic, Liwag wrote that “all eyes will be on Spirit’s ability to weather a loss of revenue from the strike.”
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