Strike by 18,500 halts production of Boeing's commercial jetliners

Machinists walkout comes as plane maker is on a roll

September 03, 2005|By Susan Diesenhouse | Susan Diesenhouse,CHICAGO TRIBUNE

CHICAGO - The Boeing Co., flooded with orders for its 787 Dreamliner commercial jet, suddenly faces a potentially crippling work stoppage.

Just after midnight Thursday, the 18,500 machinists who make parts and assemble planes for Boeing went on strike, halting operations at one of the world's largest makers of commercial planes.

The strike comes at a particularly inopportune time for Boeing, which is locked in a battle for market share dominance with Airbus SAS, its European archrival. Boeing has won several big orders for the 787 in the past six months, and a long and disruptive strike could slow down momentum. The plane won't be ready for delivery until 2008.

A significant majority - 86 percent - of workers in Seattle, Wichita, Kan., and Portland, Ore., who belong to the Machinists union voted to reject Boeing's offer of a new contract.

The workers want to maintain their current level of benefits, but the company asked them to accept cuts in pensions, health care benefits and job security, a union spokeswoman said.

A Boeing spokesman said the Chicago-based company had made what it considers an attractive, competitive offer of approximately $15,400 in extra pay and benefits per worker over the three-year term of the contract.

Boeing, which is striving to regain the title of world's top aircraft supplier that it ceded to European rival Airbus in 2003, has a strong balance sheet and a fistful of future orders.

In the second quarter, it had revenue of $15 billion, up 15 percent from the same period a year earlier, and an operating margin of 5.4 percent, up from 4.9 percent in 2004. The company expects to deliver 320 planes in 2005, a spokesman said.

"We've given concessions, but if we accept more of them in good times, what will the company ask from us in bad times?," asked Connie Kelliher, a union spokeswoman in Seattle.

Charles Bickers, a spokesman for Boeing, said: "Our employees helped us in some of the worst times in the aviation industry."

"Last year, we added 7,000 jobs in the Seattle area and put in place a financial incentive plan with union input to link our employees to the company's financial success," he said.

He said the company is open to further talks with the union that recognize Boeing's drive to be competitive and win new business.

Although the Machinists strike halted production of commercial airplanes, Boeing will continue to build military aircraft, service existing customers and do design and development work, Bickers said.

A tug of war between titans, the company is healthy and the union, among the most powerful in the country, has skilled members whom the company cannot easily replace, explained Richard L. Aboulafia, an aerospace analyst with the Teal Group in Fairfax, Va.

"It's an irresistible force meeting an immovable object," he said. "The problem is that the union asked for something almost unattainable in this day and age: a combination of job security and higher pension payments, which are a recipe for hurt."

Ironically, a union victory may lead the company to outsource more work, he said.

Given the pressure coming from Airbus, the company and its workers can ill-afford the kind of standoff that occurred the last time Boeing Machinists went out on strike, analysts said.

That came in 1995 and lasted for 69 days. But Airbus was much less of a threat then. A strike of that duration this time could easily push orders over to the competition.

The Chicago Tribune is a Tribune Publishing newspaper.

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