(Reuters) - Boeing Co’s 27,000-strong machinists union is on strike, halting commercial airplane production, after last-ditch talks failed to agree to a new labor contract by a deadline of midnight Seattle time on Saturday.
Boeing says plants will stay open, with workers in other unions and nonunion employees expected to report, but production lines at its massive facilities in Everett and Renton, Washington, will halt assembly.
If the fourth Boeing strike in 20 years is prolonged, here are some of the financial losses and problems predicted for the company and an increasingly worldwide supply chain. Economists also anticipate a drag on the Seattle-area and U.S. economies.
-- Boeing could lose up to $3 billion in revenue per month, half the company’s expected monthly total, if deliveries of its commercial planes are halted, based on figures from the first half of the year.
-- It could lose 30 cents to 40 cents from earnings per share for each month of a strike, according to Wall Street analysts. The company is expected to earn $5.85 per share for the year, on average.
-- Delivery delays would inconvenience major airline customers such as AMR Corp’s American Airlines, Continental Airlines and Southwest Airlines Co.
-- Buyers of the new 787 Dreamliner, already angered by production delays, would face an even longer wait. Big customers include Japan’s All Nippon Airways, Australia’s Qantas Airways, Britain’s Virgin Atlantic and Singapore Airlines.
-- U.S. plane leasing company, International Lease Finance Corp, a unit of insurer American International Group Inc, is the biggest 787 customer, with 74 on order.
-- A lengthy work stoppage could be an opportunity for rival Airbus, a unit of EADS, to pick up some plane orders from uncertain airlines.
-- If Boeing’s plane production lines stop, suppliers will stop or reschedule deliveries, causing inventory pile-ups and possible layoffs. Boeing’s major suppliers include:
-- General Electric (engines)
GE supplies its own engines for some wide-body models and its CFM International 50-50 joint-venture with France’s Safran supplies all the engines on the 737 single-aisle series, Boeing’s top-selling model of aircraft.
-- Pratt & Whitney, a unit of United Technologies Corp (engines)
-- Rolls-Royce (engines)
-- Spirit Aerosystems Holdings (fuselage, wings)
-- Honeywell International (electronics)
-- Rockwell Collins (avionics)
-- Goodrich Corp (wheels, brakes)
-- Alenia Aeronautica, part of Finmeccanica (fuselage on 787)
-- Latecoere (787 passenger doors)
-- Japan’s “heavies,” which are working on 787 structures:
-- Mitsubishi Heavy Industries
-- Kawasaki Heavy Industries
-- Fuji Heavy Industries
-- Boeing is the leading private employer in the Puget Sound area around Seattle. There are 13,000 IAM union members at its wide-body plant in Everett, Washington, 5,000 at nearby Renton and more scattered throughout the area.
-- A strike would mean no pay for workers, signaling cutbacks in home and leisure spending and a likely increase in defaults on home loans and credit-card debt.
-- The IAM offers to pay strikers only $150 per week from the third week of a strike. Normal health-care coverage ends after a month.
-- Striking workers generally cannot claim unemployment benefits, but others whose jobs are affected because of a strike can, which could increase jobless claims nationwide.
-- Figures for U.S. companies’ inventories would rise.
-- If airlines stop making new orders for Boeing’s planes, it would drag down closely watched monthly durable goods orders figures.
-- If a strike leads to improved terms, other U.S. workers would be more tempted to take action in upcoming contract talks.
Reporting by Bill Rigby; Editing by Tim Hepher and Maureen Bavdek
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