About 3,200 mechanics and other Boeing defense workers in the St. Louis area went on strike early this morning, adding strain to the production lines of high-profile military programs like the T-7 Red Hawk training jet and F-15EX Eagle II.
The work stoppage at three factories in St. Louis, MO, St. Charles, MO and Mascoutah, IL marks the first time since 1996 that members of the local International Association of Machinists and Aerospace Workers chapter voted to walk off the job.
“IAM District 837 members have spoken loud and clear, they deserve a contract that reflects their skill, dedication, and the critical role they play in our nation’s defense,” IAM District 837 directing business representative Tom Boelling said in a statement. “We stand shoulder to shoulder with these working families as they fight for fairness and respect on the job.”
Mechanics in that region are responsible for military aircraft production, including the Navy’s F/A-18E/F Super Hornet and MQ-25 Stingray autonomous tanker. Boeing is also expanding its St. Louis facility to support production of the Air Force’s new sixth-generation fighter, called the F-47. The Trump administration awarded Boeing the multibillion-dollar F-47 contract in March following a competition that also involved Lockheed Martin.
Experts say the magnitude of the strike’s impact ultimately depends on how long it lasts.
“It implies that the availability of skilled labor is a limiting factor and therefore challenges program execution moving forward,” Richard Aboulafia, managing director at the AeroDynamic Advisory, told Inside Defense. “But again, this could be settled in a day or two, and I think that [concern] would probably go away.”
What is more interesting, Aboulafia said, is the notion that the strike follows a relatively successful period for Boeing’s defense business.
The company had, until recently, absorbed steep losses in previous quarters due to its fix-price development programs. But Boeing executives last Tuesday said the company had returned a profit on its defense programs in the first half of this year, a welcome progression for several investors.
Much of Boeing’s recent improved financial performance could be attributed to culture-change efforts spearheaded by CEO Kelly Ortberg and CFO Brian West, Aboulafia added, which is why Monday’s strike seems “strange.”
“It's strange. I mean, you know, for years, I guess Boeing management was pretty much worst in class, and over the past year, it's gotten infinitely better with Kelly Ortberg, but they still haven't made a whole lot of progress on labor relations,” he said. “I don’t get it.”
IAM District 837 on July 28 rejected an earlier contract offer from Boeing which included a 20% wage increase over four years and $5,000 ratification bonuses -- setting the stage for Sunday’s strike.
Last night’s latest contract offer again did not further hike wages -- which the union argued for -- but it did remove a scheduling clause that would have affected workers’ ability to earn overtime pay, according to the union.
Boeing executives saw the strike on the company’s horizon following the July 28 vote, with the CEO calling it manageable during a call with investors last week. He referenced a much larger strike last year which halted the work of more than 30,000 Boeing machinists.
In September, the Seattle-based IAM which represents Boeing technicians who build commercial jetliners carried out a strike that lasted seven weeks and led to losses of about $9.6 billion.
“The order of magnitude of this is much, much less than what we saw last fall. That was roughly 30,000 machinists. So, we'll manage through this. I wouldn't worry too much about the implications of the strike. We'll manage our way through that,” Ortberg said Tuesday during a call to discuss Boeing’s second quarter earnings.
If he had to guess, Aboulafia said the St. Louis strike probably won’t last as long as last year’s. But he said he won’t make any bets because he anticipated the Seattle work stoppage would also last just a few days.
“I didn't get the Boeing Commercial strike last year. It was a 53-hour strike that was hiding inside the body of a 53-day strike,” Aboulafia said. “Hopefully this won't be the same thing, but this should be a 53-hour strike. So, end of problem.”
Any strike that encompasses weeks or months would, however, have an impact, he added, at least in terms of whether Boeing’s defense unit remains profitable through the second half of this year. The only aircraft which might face delays in that scenario, Aboulafia said, are programs that are already behind schedule, such as the T-7.
“We are prepared for a strike and have fully implemented our contingency plan to ensure our non-striking workforce can continue supporting our customers,” Dan Gillian, vice president of Boeing air dominance division, said in a statement.
Boeing’s defense unit accounted for about 30% of the company’s $42 billion in revenue in the first half of this year.