Spirit AeroSystems, Union Encouraged By Talks As Strike Enters First Week

Spirit AeroSystems and representatives of its union workers continued to meet June 26 with the help of a federal mediator after the workers started a strike in Wichita on June 24.

Spirit and District 70, Local Lodge 839 of the International Association of Machinists and Aerospace Workers (IAM) indicated their ongoing talks were helpful, but they did not indicate new agreements were reached nor a timeline for resolving the strike.

“The [IAM] Committee has been working hard to negotiate a fair and equitable contract that reflects the contributions of our members,” the union said June 24 as picketing started at the Wichita aerostructures giant. “Our goal is to bring a final and best offer to our membership for a vote.”

Spirit AeroSystems CEO and President Tom Gentile said talks over the weekend made “good progress” toward contract language. “The meetings have been constructive and positive, and Spirit leadership remains committed to a timely resolution to negotiate a fair and competitive contract that addresses the priorities of our IAM-represented employees,” he said June 26.

Gentile also asked workers who could work from home to do so starting June 26.

Spirit, the supplier responsible for a majority of the Boeing 737 airframe, told union workers in Wichita not to report for work starting with the first shift June 22 after unionized workers there authorized a strike starting June 24 and following their rejection of the Tier 1 aerostructure leader’s last and best contract offer. Around 6,000 IAM members were represented by the vote, with the results—deemed a surprise—on June 21 sending a proverbial shockwave through the aerospace industry. Around 79% voted to reject Spirit’s contract with 85% formally approving a strike 

Industry executives, advisers and other union workforces are watching developments for myriad reasons. For starters, a prolonged strike is expected to affect Boeing and Spirit’s imminent plans to raise monthly production of 38 new 737s from roughly 31 made a month now. Financial analysts question whether the companies’ combined built-up inventory of unfinished 737s from the pandemic and MAX crises can sustain an extended halt of new production.

Also, Spirit’s financial results for 2023 increasingly will be under threat as long as a strike endures and production suffers. The terms of Spirit’s last offer already were considered steep but necessary, analysts said. They were believed to be a key reason Spirit recently changed its overall forecast to Wall Street for 2023 from breakeven cashflow to a cash burn.

Finally, Boeing also is facing union negotiations in 2024 and all gains that the IAM achieves with Spirit are seen as table stakes for other negotiations across the industry. A fifth of Boeing’s union workforce are represented by IAM alone—another 11% by other unions—and the first of two agreements with IAM workers expires September 2024. About 50,000 employees, 32% of Boeing’s total workforce, were union represented as of Dec. 31, 2022.

“Union actions at suppliers can also affect us,” Boeing said in its latest annual regulatory filing Jan. 27. “Work stoppages and instability in our union relationships could delay the production and/or development of our products, which could strain relationships with customers and result in lower revenues.”

Sources with knowledge of the situation told Aviation Week that 787 re-work in Everett, Washington, is not affected by the strike. Spirit has people on site there to do the work it is responsible for, primarily removing the 787’s nose section and re-working elements of the forward pressure bulkhead under the flight deck.