Boeing strike could cost $100 million a day

Thousands of workers at Boeing have commenced strike action after a 48-hour moratorium failed to produce agreement on a three year pay deal between the aircraft manufacturer and the International Association of Machinists and Aerospace Workers.  ┬á Boeing offered its 27,000 assembly workers an 11 percent pay deal over three years, increasing average pay and benefits by $34,000, but its ÔÇ£best and finalÔÇØ offer was overwhelmingly rejected by 87 percent of union members Wednesday. ┬á┬á Strike action was postponed for 48 hours in the hope that agreement could be reached, but last minute negotiations proved fruitless, and no further talks are currently scheduled.┬á┬á Boeing spokesman Tom Healy said the company was open to further discussions, however. "We've bargained in good faith, we've worked hard, but we've not been able to close the gap," he said. "We've not been able to come close on an agreement." ┬á┬á The Machinists Union is Boeing's biggest labor group, and the company has said it will not try to assemble aircraft during the strike, which means production will cease on Boeing's 737, 747, 767 and 777 planes, as well as its flagship new project, the 787 Dreamliner. The stoppage could cost Boeing $100 million a day in lost revenues.┬á┬á While early reports of the dispute last week focused on pay and benefits, the issue of job security has now emerged as a more fundamental problem. ┬á┬á The 2002 contract between Boeing and the union gave Boeing the flexibility to use outside companies for work usually done by IAM members. Boeing has since widened its base of suppliers, and the union is concerned that a progressive increase in outsourcing has cost its members thousands of jobs over the last few years.┬á One of the most contentious provisions in the 2002 contract allows non-union contractors to deliver parts directly to BoeingÔÇÖs assembly lines, but it passed because the union failed to gain enough support to call a strike.  The union now wants the subcontracting clause rewritten, but that could prove a huge stumbling block as Boeing now has contracts with companies all over the world to produce parts and subassemblies.┬á┬á Engineering firms in Japan, including Mitsubishi Heavy Industries, Kawasaki Heavy Industries, and Fuji Heavy Industries have taken a share of the Dreamliner project's risks in developing new carbon-fiber fuselage and wing structures. Further disruption to the 787ÔÇÖs production schedule has serious implications for them.┬á┬á EuropeÔÇÖs biggest participant in the project is Italy's Alenia, a unit of aerospace and defense giant Finmeccanica, which is building parts of the fuselage and tail. In the US, aerospace component manufacturers Rockwell Collins and Goodrich Corp may face problems if Boeing stops taking delivery of parts. ┬á┬á*┬á┬á┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á┬á┬á *┬á