Boeing halted production on Friday as 18,000 machinists went on strike, dealing a setback to the company just as worldwide orders had begun to pick up and it was gaining ground against rival Airbus.
Picket lines went up outside Boeing factories after a midnight Thursday deadline expired. No negotiations are scheduled in the dispute, which centers on wages, health care and pension costs.
The striking workers are mainly located in the Seattle area, where most of the company's production is based, with some 1,000 others at the company's Wichita, Kansas, facility and another 1,000 in Gresham, Oregon. The last machinists' strike against Boeing was in 1995 and lasted for 69 days, slowing airplane deliveries.
During this year, Boeing anticipated selling 320 commercial aircraft, driven in large part by demand in Asia and the Middle East. While that is considerably lower than the 598 planes Boeing sold in 2000, the company's best year, it exceeds Airbus' current orders of 276 and represents a strong comeback following a drop in orders after 9/11.
Wall Street analysts said they did not expect the strike to change Boeing's order outlook, even if it lasted for several months. Airplane orders typically have a long lead time and take more than a year to produce.
"Does this mean that Boeing will lose business to Airbus?" said Cai von Rumohr, an aerospace analyst with S.G. Cowen. "If the strike does not last more than three months, that would be unlikely."
Boeing's shares, which had risen more than 35 percent during the year, were hit hard Friday, falling by 2.5 percent, or US$1.65, to close at US$64.34. Even though Boeing will not assemble planes during the strike, the company said design and development work would continue, as well as customer support and fleet repairs.
Employees who are not members of the International Association of Machinist and Aerospace Workers have been reporting to work, said Charles Bickers, a Boeing spokesman. Striking employees represent about one-third of the company's Seattle-area workforce.
"We're open to discussion as long as it is clear that both sides understand the business reality that we face," Bickers said.
Talks between Boeing and the union broke down after three months. Boeing offered employees a 5.5 percent wage hike and an increase in pension payments of US$66 per month for every year of a retired employee's service. The company proposed separate packages for its Wichita employees.
The union wants employees in Wichita to get the same package as others and is seeking greater job security. It is pushing for an US$80 a month increase in pension payments and objects to the company's new health care plan, which it says pushes too many costs onto the workers.
Mark Blondin, president of Union District 751, said the Boeing offer represented a "corporate strategy to break the workers who have built this company." Noting that Boeing's profits had tripled in the last three years, Blondin said the union had "simply asked Boeing to do the right thing for their workforce."