Boeing strike threatens global aero industry

By Laura Myers and Bill Rigby

EVERETT, Washington/NEW YORK, Sept 7 (Reuters) - Boeing Co's (BA.N: Quote, Profile, Research, Stock Buzz) 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 (7011.T: Quote, Profile, Research, Stock Buzz), Kawasaki (7012.T: Quote, Profile, Research, Stock Buzz) and Fuji (7270.T: Quote, Profile, Research, Stock Buzz) 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.

Italy's Alenia, a unit of aerospace and defense giant Finmeccanica (SIFI.MI: Quote, Profile, Research, Stock Buzz), is Europe's biggest player on the 787, building parts of the fuselage and tail.

In the United States, Spirit Aerosystems Holdings Inc (SPR.N: Quote, Profile, Research, Stock Buzz), a former Boeing unit making the front fuselage, looks to be the most vulnerable. Aerospace component firms Rockwell Collins Inc (COL.N: Quote, Profile, Research, Stock Buzz) and Goodrich Corp (GR.N: Quote, Profile, Research, Stock Buzz) may also face inventory problems if Boeing stops taking delivery of parts. (For FACTBOX on Boeing's 787 supply chain, click [ID:nL7155160]) (For FACTBOX on Boeing's plane portfolio, click [ID:nL5154904]) (For FACTBOX on Boeing strike impact, click [ID:nL7544993])

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

Singapore Airlines (SIAL.SI: Quote, Profile, Research, Stock Buzz), 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.  Continued...