Boeing strike threatens global aero industry

Pickets sit at the ready at the Boeing machinists union hall in Renton, Washington September 5, 2008. Boeing Co's 27,000-strong machinists' union walked off the job on Saturday after the plane maker failed to improve its contract offer following two days of emergency talks.

NEW YORK/EVERETT, Washington (Reuters) - Boeing Co's 27,000-strong machinists' union walked off the job on Saturday after the plane maker failed to improve its contract offer following two days of emergency talks.

"Despite meeting late into the night and throughout the day, continued contract talks with the Boeing Company did not address our issues," Tom Wroblewski, the international union's Seattle-area president, said in a letter to members. "The strike is on."

The walkout means there will be no further production of Boeing's 737, 747, 767 and 777 planes, and that its already delayed 787 Dreamliner will fall even further behind schedule.

By midday on Saturday, a couple dozen people had gathered near the gates of Boeing's factory in Everett, Washington, calmly waving picket signs at drivers who would honk or shout support.

Union members said they expect a bigger showing on the picket lines on Monday without the distraction of a sunny weekend.

The vast majority of the International Association of Machinists and Aerospace Workers' members voted to reject Boeing's "best and final" offer on Wednesday, but postponed a strike for 48 hours to give negotiators more time.

Boeing and IAM negotiators, along with federal mediators, met near Orlando, Florida, in a last-ditch effort to end disagreements over wage increases, health care contributions and the company's outsourcing policy.

"Over the past two days, Boeing, the union and the federal mediator worked hard in pursuing ... options that could lead to an agreement. Unfortunately the differences were too great to close," Scott Carson, head of Boeing's commercial plane unit, said in a statement.

No further talks are scheduled. Both sides said they were waiting for the other to make the first move. Boeing spokesman Tim Healy said the company was open to hearing from the IAM.

"If this company wants to talk, they have my number, they can reach me on the picket line," Wroblewski said in a message to union members.

PLANTS REMAIN OPEN

The strike started officially for most of the union members at midnight Seattle time, which is when the previous three-year contract expired. The bulk of Boeing's machinists work at plants around the Puget Sound area.

"It could be a couple of days or three months. It depends on whether the company wants them to go back to work," said Ed Zvonik, a 30-year Boeing veteran, when asked how long the strike might last.

Boeing said it would keep its plants open, with workers in other unions and non-union employees expected to come to work. But production lines at its massive facilities in Everett and Renton, Washington, would stop.

The company plans to deliver planes that had already come off production lines, but will not do any more work on assembling aircraft. Airlines tend to be wary of planes not produced by regular skilled workers.

Boeing spokesman Healy said a protracted strike could mean Boeing would miss its target of making the first 787 test flight in the fourth quarter. The plane was originally supposed to fly last summer, but has been derailed by production problems.

"They took a swing with a baseball bat at a bee hive and got stung. They didn't realize how strong we were," said Dale Flinn, 53, a Boeing door mechanic.

In Asia, Singapore Airlines, which has 20 of the 787s on order for delivery starting in 2011, said it was in talks with Boeing over how the walkout might affect deliveries.

"We're in discussion with Boeing about the impact this strike will have on the programme," spokesman Stephen Forshaw told Reuters in an e-mail message on Sunday.

Boeing, which made a $4.1 billion profit last year and has a record $275 billion worth of commercial plane orders in its books, could financially survive a short work stoppage. The strike will cost it about $100 million in revenue per day and knock about 1 cent per day off earnings per share, according to Wall Street analysts.

The walkout by the IAM is the fourth at Boeing in 20 years. The union struck for 48 days in 1989, 69 days in 1995 and 28 days in 2005. In 2002, a contract was adopted by default, as it was rejected by workers but fewer than two-thirds of them approved a strike.

BEST AND FINAL

Boeing's "best and final" contract offer this time around was delivered to union members a week ago, proposing an 11-percent wage increase over the three-year life of the contract, a one-time lump sum and ratification bonus, and other incentives that the company said would add about $34,000 to the pay of the average machinist, who now makes about $65,000 a year including overtime.

That failed to meet union demands for a 13-percent wage increase, no change to health care contributions and the rollback of provisions allowing Boeing to outsource work.

"I don't see where we are that far apart," said Ron Strempel, a team leader and electrician on the 767. "It's just a matter of the company listening to us about the things that are important to us."