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Boeing strike threatens global aero industry

EVERETT, Washington/NEW YORK - Boeing Co's 27,000 machinists prepared for a third day of strike action, halting production at the plane maker's Seattle-area plants in protest at Boeing's contract offer and what they see as plans to shift more jobs to non-union and foreign companies.

The fourth strike in 20 years by Boeing's biggest union threatens to cost the company $100 million a day in revenue and is likely to cause problems for a long list of suppliers across the world in an increasingly global aerospace business.

On Sunday, about 15 picketers milled about the main entrance to Boeing's Everett, Washington plant, which usually employs 13,000 members of the International Association of Machinists and Aerospace Workers (IAM).

'It's not about the money, it's all about the subcontracting wordage,' said picketer Butch Blount, a 53-year-old motor equipment operator, handing out cookies to fellow strikers. 'My job is one they could possibly offload to a subcontractor.'

The IAM, whose members call themselves the 'Fighting Machinists', is looking for higher pay and better benefits from Boeing, but is particularly worried about language put in the contract in 2002, when times were lean in the aerospace industry, which gave Boeing the power to use outside companies for work usually done by IAM members.

Boeing took advantage of that to widen its base of suppliers for its newest plane, the 787 Dreamliner, which is being made by companies around the world and only assembled in Everett. The union says Boeing has got rid of 16,000 IAM members since 1990 with the progressive increase in outsourcing.

'We understand our jobs are going away,' said John Jorgensen, 62, a final assembly mechanic who has worked at Boeing for 43 years. 'If we don't get subcontracting language protection (now), we'll never get it. We have Boeing loyalty, but the top of the company has no loyalty to us.'

Union members in the nearby IAM hall said there would be more action early on Monday Seattle time, when greater numbers of picketers are expected at the plant's gates to see if workers attempt to cross the picket line.

Strike felt around the world

The result of outsourcing, especially on the 787, means the effect of the stoppage will be felt around the world, piling up inventories and putting pressure on Asian and European suppliers responsible for much of the main body of Boeing's newest aircraft.

Japan's heavy engineering firms Mitsubishi Heavy Industries, Kawasaki Heavy Industries and Fuji Heavy Industries are taking part of the project risk in developing new carbon-fiber fuselage and wing structures for the 787, and stand to lose if the project is further derailed.

A spokesman at Fuji Heavy, whose main business is making cars under the Subaru brand, said on Monday a prolonged strike could have an impact on its aircraft division.

'We do good business, especially for the 777. Right now we're waiting for information from Boeing, but if this lasts one, two weeks, it would have some impact,' he said.

Mitsubishi Heavy declined to comment. Kawasaki Heavy said it

was checking on the potential impact.

Italy's Alenia, a unit of aerospace and defense giant Finmeccanica is Europe's biggest player on the 787, building parts of the fuselage and tail.

In the United States, Spirit Aerosystems Holdings Inc a former Boeing unit making the front fuselage, looks to be the most vulnerable. Aerospace component firms Rockwell Collins Inc and Goodrich Corp may also face inventory problems if Boeing stops taking delivery of parts.

Airlines have been quiet so far on the effects of the strike.

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.

Lines Stopped

Production at the world's biggest-selling jetmaker halted early on Saturday after Boeing failed to improve its contract during two days of emergency talks with the IAM, which rejected the company's 'best and final' offer on Wednesday.

No further talks are planned.

That means there will be no further production of Boeing's 737, 747, 767 and 777 planes -- one of the main U.S. export currency earners -- and its already delayed 787 Dreamliner could fall even further behind schedule.

The new freighter version of its popular long-range 777, which has 75 orders and is set for first delivery in the fourth quarter, also faces delays, along with early production work on Boeing's new jumbo, the 747-8.

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 knock about 1 cent per day off earnings per share, according to Wall Street analysts.

Economists have warned a prolonged strike could badly hit the economy around the Seattle area, where Boeing's commercial assembly plants are located, and dent the overall U.S. economy.

Boeing shares, valued at around $46.5 billion, have dropped more than 6 percent since Wednesday.