Boeing Workers Strike Over Contract Dispute, Halting Production

Boeing factory workers on the U.S. West Coast initiated a strike after rejecting a contract offer. The dispute, the first since 2008, has halted production of the 737 MAX jets amid regulatory scrutiny and financial distress. New CEO Kelly Ortberg faces a challenging labor-management battle.

Boeing's U.S. West Coast factory workers walked off the job early on Friday after overwhelmingly rejecting a contract deal, halting production of the planemaker's strongest-selling jet as it wrestles with severe output delays and heavy debt. The workers' first strike since 2008 comes as the planemaker is under heavy scrutiny from U.S. regulators and customers after a door panel blew off a 737 MAX jet mid-air in January.

The mounting crises battered Boeing's stock and sparked a leadership upheaval. Boeing shares fell 3.4% in U.S. pre-market trading on Friday. New CEO Kelly Ortberg has to confront a labor-management battle just weeks after he was brought in to restore faith in the planemaker.

He proposed a deal including a pay rise of 25% over four years, far lower than the 40% workers had demanded. Roughly 30,000 International Association of Machinists and Aerospace Workers (IAM) members who produce Boeing's 737 MAX and other jets in the Seattle and Portland areas voted on their first full contract in 16 years, with 96% rejecting it and favoring a strike in a two-part ballot.

"This is about respect, this is about addressing the past, and this is about fighting for our future," said Jon Holden, who headed the negotiations for Boeing's largest union, before announcing the vote result on Thursday evening. "We strike at midnight," said the union leader who had agreed to the just-defeated deal, as members in the union hall cheered and chanted: "Strike! Strike! Strike!"

Boeing said late on Thursday the vote sent a clear message that the tentative deal it reached with IAM leadership was not acceptable to members. "We remain committed to resetting our relationship with our employees and the union, and we are ready to get back to the table to reach a new agreement," the planemaker said.

The proposed deal also included a $3,000 signing bonus and a pledge to build Boeing's next commercial jet in the Seattle area, provided the program was launched within the four years of the contract. Although IAM leadership recommended last Sunday that its members accept the contract, many workers had responded angrily, arguing for the original demand and lamenting the loss of an annual bonus.

(With inputs from agencies.)