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Long Boeing strike could affect Carolinas companies

A long strike by Boeing Co. machinists – who walked off the job over the weekend – could have an impact on suppliers in the Carolinas.

Charlotte-based Goodrich Corp. supplies landing gear, wheels and brakes for Boeing's commercial aircraft, while Cyril Bath Co. makes parts for aircraft fuselages and frames in Monroe.

Officials at both companies said Monday that the machinists strike hasn't affected production. But an impasse that stretches on for weeks or months could ultimately cause some deliveries to be delayed, said Michael Zimmer, president of Cyril Bath.

“So far, nothing has trickled down directly to change our schedules,” Zimmer said. “But we certainly do expect that (delays) will be coming.”

Another Boeing supplier, Spirit AeroSystems, on Monday withdrew its previous 2008 financial forecast and said it was cutting volumes on some Boeing products. The Wichita, Kan.-based company is planning a $570.5 million plant in eastern North Carolina that would eventually employ more than 1,000 people. Scheduled to open in 2010, the plant would initially make fuselage components for the Airbus A350 wide-body jet, which competes with Boeing's 787 Dreamliner.

Members of Boeing's largest union, the International Association of Machinists and Aerospace Workers, have stopped work over three of the last six labor contracts, with strikes lasting four to 10 weeks.

“I would expect this one's going to be long,” said Scott Hamilton, a Seattle-based aviation consultant. “There are some pretty serious issues that they're pretty far apart on.”

The union's 27,000 members are trying to use a record order-backlog and the tight timetable of the delayed 787 Dreamliner to get a sweetened deal. Boeing still needs to make about 40 jets a month to meet its 2008 deliveries forecast, and it had planned to test the Dreamliner in flight in November in order to start shipments in next year's third quarter.

Boeing last week said a protracted strike would keep the 787, its most successful new plane based on orders, from flying this year. Airlines have been counting on newer, more fuel-efficient aircraft to help offset oil prices.

Boeing offered employees a package including an 11 percent raise over three years, bonuses and a 14 percent gain in pension payments. The proposal fell short of the 13 percent raise the IAM sought and didn't address its request to limit the use of outside contractors for work the machinists have traditionally done. Boeing also asked that workers pay higher medical co-pays and deductibles.

Union members voted to reject the contract, and the strike started Saturday after no compromise was reached.

Richard Aboulafia, an aviation analyst in Fairfax, Va., said this strike “seems a little worse than most.”

“It's hard to tell what's posturing and what's an unbridgeable gap,” he said. “In a few weeks, cooler heads might begin to reassess.”

Goodrich, a Fortune 500 company, suffered only a minimal impact during the last strike at Boeing in 2005, said Laurie Tardif, a Goodrich spokeswoman. Boeing accounts for about 10 percent of Goodrich sales, Tardif said, and “we supply products to virtually everything they make commercially.”

Goodrich hasn't revised forecasts because of the strike, Tardif said, and executives declined to speculate on its potential impact.

“We continue to ship product to Boeing at this time,” she said, “and we are hopeful that it will be resolved quickly.”

At Cyril Bath, however, Zimmer said some Boeing deliveries already had been delayed from this year to 2009 before the strike, which he suspected could push back more deliveries. The company makes airframe components that are shipped to a Boeing contractor in Italy, he said.

But Zimmer also said he didn't expect any delays to become cancellations.

“We've been told they plan to make every bit of that up,” he said. “I still think it's very secure long-term.”

Bloomberg News contributed.
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