Boeing’s Top Supplier Halts Factory Work As Union Votes To Strike

Spirit AeroSystems plunged in premarket trading in New York after aircraft workers that are part of International Machinists and Aerospace Workers, IAM Local 839 (District 70) rejected a new labor contract, forcing the Wichita-based aerospace company that is Beoing’s largest supplier to suspend operations on Thursday, reported Reuters. 

According to local media KSNW, Union Leader Cornell Beard said 79% of union employees voted “no” to the proposed four-year labor deal, and 85% voted to strike. The deal called for a 16% pay increase through 2027. The contract also addressed overtime, bonuses, retirement benefits, and health insurance plans. There were concerns about insurance changes and costs not covered in the proposed deal. 

Late Wednesday night, the union confirmed the strike begins on Saturday. They offered this statement:

“The IAM’s dedicated and hardworking membership at Spirit AeroSystems has worked without fail during tumultuous times, including a pandemic that saw everything grind to a halt. Most of our members have concluded that the company’s offer is unacceptable. IAM District 70 and Local 839 will regroup and begin planning the following steps to bring the company back to the table.”

Spirit AeroSystems released this statement:

“We are disappointed that our employees represented by the International Association of Machinists and Aerospace Workers in Wichita have rejected our four-year contract offer and have voted to strike. We believe that our fair and competitive offer recognizes the contributions of our employees and ensures we can successfully meet increasing demand for aircraft from our customers. We know that no one wins in a work stoppage; however, we respect the rights of our represented employees. Despite this setback, we are not distracted from the task at hand. We look forward to continued meetings with IAM leadership.”

IAM represents 6,000 machinists at Spirt AeroSystems, producing most of Boeing’s 737 fuselages and other major aircraft assemblies. Any prolonged shutdown threatens to disrupt production at Boeing. 

Shares of Spirt AeroSystems tumbled 8% in premarket trading. 

Boeing shares were down more than 3%. 

“It’s not a welcome development,” Richard Aboulafia, an aerospace analyst with AeroDynamic Advisories, told Reuters. 

“I think the general feeling is that (Spirit) had it under control with what appeared to be an reasonable agreement,” he said. But after more than a decade of cost pressure on the aerospace industry, “labor feels like they have some power.”

This labor action comes at the worst possible time for Boeing as it was planning to ramp up production of its cash cow 737 Max.