3,200 Workers at Missouri Plant Set to Strike
Smaller Scale Than Last Year's Washington Walkout
Concerns Over Potential Burden on Business Normalization Plans
The British Financial Times (FT) reported on August 3 (local time) that the labor union of Boeing's defense division in the United States is set to go on strike. While the short-term management impact of the strike is not expected to be significant, there are concerns that it could pose a burden to Boeing's business normalization plans.
According to FT, 3,200 union members at Boeing's defense division plant near St. Louis, Missouri, are scheduled to begin a strike at midnight on this day. Boeing's defense division manufactures aircraft and missiles, including the F-15 fighter jet, F/A-18 fighter jet, T-7A trainer, and MQ-25 drone tanker.
The International Association of Machinists and Aerospace Workers (IAM) Local 837, which represents Boeing's defense division workers, had previously announced the strike after union members voted down a wage negotiation proposal?including wage increases and higher retirement benefits?on July 27.
Boeing's defense division employs approximately 19,000 people. This division accounted for about 29% of the company's total revenue of $22.75 billion in the second quarter of this year and has continued to show strong performance, including securing a contract in March to develop the next-generation F-47 fighter jet. In fact, the division posted an operating profit of $110 million in the second quarter, a turnaround from an operating loss of $913 million in the same period a year earlier. Boeing has also frequently been mentioned as a 'gift' offered by counterparties to the United States during tariff negotiations under the Donald Trump administration.
Boeing's defense division has suffered losses due to cost overruns and fixed-price contracts, including delays in the production of two next-generation Air Force One aircraft. The contract, signed during the Trump administration, experienced setbacks in workforce and parts supply due to the COVID-19 pandemic, resulting in postponed delivery dates.
This strike comes just one year after 33,000 workers at the Washington plant went on strike for two months, halting production and delivery of the 737 MAX commercial aircraft and causing billions of dollars in losses. FT noted that, "With federal authorities imposing production limits on the 737 MAX, this strike could add pressure to Boeing's extensive business normalization plans."
The company has already activated emergency plans to minimize the impact of the strike and reduce production disruptions. Dan Gillian, Vice President of Boeing Air Dominance within the defense division, stated, "We are disappointed that employees rejected an offer that included an average 40% wage increase and addressed the key issue of alternative work schedules," adding, "We have prepared for the strike and fully implemented contingency plans so that non-striking staff can continue to support customers."
Kelley Ortberg, Boeing's Chief Executive Officer (CEO), emphasized during a conference call following the second quarter earnings announcement that "the situation is fully manageable." He stated, "The scale of this strike is much smaller compared to last fall," and added, "This strike will not shake our goal of restoring a high single-digit operating margin in the defense business."
According to Bloomberg, this is the first time in 29 years since 1996 that the Boeing St. Louis plant has gone on strike.
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