Boeing Co's 25,000 machinists may strike Monday, halting airliner production at the world's biggest planemaker, after union leaders urged members to reject the company's proposal for a new three-year contract.
"Boeing put forward a job-killing, money-stealing, retiree-mugging offer," said Dick Schneider, chief negotiator for the International Association of Machinists.
The union said Boeing's proposal for a 20 percent boost in pensions wasn't enough, new health-care premiums would add US$10,000 in costs for some members and Boeing didn't offer job-security guarantees. A strike would be Boeing's second since 2000 and would come as airlines face record losses, the company's own profit is falling and rival Airbus SAS is gaining market share.
"This is just a critical time that we meet our commitments to the airlines," Alan Mulally, head of Boeing's airliner business, told reporters. "If we let down the customers, the customers have choices." Some investors said the company can weather a strike by the machinists, who account for a third of the workforce in Boeing's airliner business, since many carriers are pressing for delays in deliveries to cope with declining air travel.
"The timing is not necessarily that bad," said Brian Eisenbarth, who owns 180,000 Boeing shares in his US$220 million Davidson Large Cap Value Strategy Fund. "They've been through strikes before, and it's just part of the business." Union members are scheduled to vote on Boeing's offer Thursday and would strike starting Monday, Labor Day in the US, if it's rejected. The membership typically follows the recommendations of union leaders, who said Boeing rejected their offer to extend the contract on a day-to-day basis until an agreement was reached.
The machinists build and assemble plane parts at Boeing plants in Washington state, Oregon and Kansas.
The workers, with an average age of 46 and a salary of US$50,000, have said they're most concerned with boosting pensions and gaining new job protections. The union called for a doubling in pension benefits and wanted the company to guarantee a minimum of jobs tied to annual deliveries.
Mulally said the company can't guarantee jobs and that the offer is fair, given that many airlines are losing money. US Airways Inc sought bankruptcy protection, UAL Corp's United has said it's contemplating bankruptcy and AMR Corp's American is grounding flights.
Boeing's own profit fell 7.3 percent in the second quarter as airliner deliveries declined.
The Chicago-based company has said a strike would force it to stop making airliners, except almost-finished jets already certified for delivery. The walkout would only start costing orders if it lasts a long time, since few airlines are buying planes now, Eisenbarth said.
Other investors said they'd still prefer a walkout to the company losing flexibility in managing its workforce.
"The union has to recognize that Airbus is delivering a product at a cheaper cost," said Rich Turgeon, an analyst with KeyCorp's Victory Capital Management Inc, which owns 2 million Boeing shares among US$70 billion in assets.
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