Strike may cost Boeing $100 million a day

08 September 2008

More than 27,000 Boeing workers have begun a strike action that is likely to cost the US aerospace giant $100 million a day in lost revenue. Boeing's production lines for its 737, 747 and 777 family of aircraft have come to a halt even it, one of the world's biggest manufacturer of commercial aircraft, struggles to meet a record backlog of orders worth $275 billion.

Critically, the strike action is now expected to further delay the much anticipated 787 Dreamliner, already running more than a year behind schedule and due to make its first flight later this year. The delay is likely to turn existing and potential customers away from the much talked about aircraft, apart from increasing the size of compensation that Boeing will have to pay frustrated customers.

Singapore Airlines, which has 20 of these futuristic aircraft on order for delivery starting in 2011, said it was in talks with the company over the impact of the strike action on deliveries.

Boeing and  International Association of Machinists and Aerospace Workers (IAM) negotiators, along with federal mediators, met in Florida in a last-ditch effort to end disagreements over wage increases, healthcare contributions and the company's outsourcing policy. The 48-hour extension of talks failed to avert the strike action as workers voted to reject Boeing's best and final offer.

Boeing proposed an 11 per cent wage increase over the three-year life of the contract, a one-time lump sum and other incentives. This did not meet union expectations of a 13 per cent wage increase, no change to healthcare contributions and the rollback of provisions allowing Boeing to outsource work.

Scott Carson, Boeing's head of commercial aircraft, said: ''Over the past two days, Boeing, the union and the federal mediator worked hard in pursuing options that could lead to an agreement. Unfortunately, the differences were too great to close.''