Boeing factory workers go on strike for the first time since 2008 after overwhelmingly rejecting a collective bargaining agreement

BoeingFactory workers went on strike after midnight Friday, halting production of the company's best-selling aircraft, after the workforce overwhelmingly rejected a new labor contract.

It is a costly development for the manufacturer, which has struggled to ramp up production and restore its reputation following safety crises.

Workers in the Seattle area and in Oregon voted 94.6 percent against a tentative agreement presented by Boeing and the International Association of Machinists and Aerospace Workers on Sunday. Ninety-six percent of workers voted in favor of a strike, far more than the two-thirds majority required for a work stoppage.

“We're striking at midnight,” Jon Holden, president of IAM District 751, said at a press conference announcing the outcome of the vote. He called the strike an “unfair labor practices strike” and claimed the factory workers were “treated discriminatorily, coerced, illegally monitored and wrongfully promised benefits.”

He said Boeing must negotiate in good faith.

Boeing has not commented on its claims.

“The message was clear that the tentative agreement we reached with IAM leadership was not acceptable to members,” the company said in a statement. “We remain committed to resetting our relationships with our employees and the union, and we are ready to return to the bargaining table to reach a new agreement.”

Stephanie Pope, CEO of Boeing's commercial aircraft division, told engineers earlier this week that the preliminary deal was the “best contract we've ever presented.”

“In previous negotiations, the view was that we should hold back a little so that we could ratify the treaty in a second vote,” she said. “We talked about that strategy this time, but we deliberately chose a new path.”

The preliminary proposal included a 25 percent wage increase and further improvements in health and pension insurance, although the union had actually demanded an increase of around 40 percent. The workers had complained about the collective agreement because it did not cover the increased cost of living.

The vote is a blow to CEO Kelly Ortberg, who has been in office for five weeks. The day before the vote, he had urged workers to accept the collective agreement and not to strike, saying that doing so would jeopardize the company's recovery.

Under the tentative agreement, Boeing had promised to build its next commercial jet in the Seattle area to win over workers after the company moved production of the 787 Dreamliner to a non-union factory in South Carolina.

If the contract had been approved, it would have been the first fully negotiated collective agreement for Boeing engineers in 16 years. Boeing workers went on strike for nearly two months in 2008.

The financial impact of this strike will ultimately depend on how long it lasts. Boeing shares fell four percent in premarket trading on Friday.

Sheila Kahyaoglu, an aviation analyst at Jefferies, estimated that a strike could cost Boeing $1.5 billion in financial damage within 30 days, saying it “could destabilize suppliers and supply chains.” She predicted that the tentative agreement, if approved, would have an annual impact of $900 million.

Boeing has burned through about $8 billion so far this year and is forever mired in debt. Production has fallen short of expectations as the company tries to address manufacturing deficiencies and faces other industry-wide problems such as supplier and labor shortages.

A tire blowout on a nearly new Boeing 737 Max 9 earlier this year has led to increased federal scrutiny of Boeing's production lines.