Boeing Co. is preparing for a strike at its St. Louis defense hub after factory workers rejected a contract offer that would’ve boosted their wages by 20% over four years.

The International Association of Machinists and Aerospace Workers Local 837, which represents 3,200 Boeing defense workers in Missouri and Illinois, said its members voted overwhelmingly against the new terms July 27. 

The Boeing proposal “fell short of addressing the priorities and sacrifices” of the company’s skilled workforce, the union said in a statement. “Our members are standing together to demand a contract that respects their work and ensures a secure future.”

While the present contract expires at 11:59 p.m. Central Time on Sunday, there’s a seven-day “cooling off” period before IAM Local 837 workers can walk off the job and shut down manufacturing in Boeing’s military aircraft factories. Boeing hasn’t scheduled any talks with union leaders, which typically are a precursor to a counteroffer.

“We’re disappointed our employees voted down the richest contract offer we’ve ever presented to IAM 837 which addressed all their stated priorities,” said Dan Gillian, Boeing Air Dominance vice president and a senior St. Louis site executive, in a statement. 

Boeing’s offer, which was endorsed by IAM Local 837’s bargaining committee, included a $5,000 signing bonus, 8% wage increase in the first year and work schedule changes intended to improve quality of life. All in, the contract would’ve boosted average wages by 40%, the company said.

“We’ve activated our contingency plan and are focused on preparing for a strike,” Gillian said. “No talks are scheduled with the union.”

The aerospace manufacturer faces another labor standoff as it recovers from a two-month strike by a Seattle-based machinists union that crippled manufacturing at its commercial jet factories last year.

Any labor strife would be costly for Boeing’s defense division, which hasn’t earned an annual profit since 2022, and is in the middle of a turnaround. A strike would shut down assembly lines for Boeing’s F-15 and F/A-18 fighter jets, T-7A trainer, MQ-25 drone refueler and other weapons systems.

The labor uncertainty will be a focus for analysts when Boeing reports quarterly earnings on July 29. It’s also a bellwether as GE Aerospace launches contract negotiations with a separate IAM local on July 29.  

St. Louis workers last went on strike in 1996, and don’t have a history of activism, unlike Boeing’s unions in the Pacific Northwest, according to Scott Mikus, an analyst with Melius Research.

Union members initially rejected management’s offer during the last negotiation with Boeing in 2022, before accepting a three-year deal with a 14% general wage increase and cost-of-living adjustments.

While Puget Sound labor leaders endorsed Boeing’s initial offer last year, they were rebuffed by rank-and-file members embittered by an earlier 10-year contract that stripped away pensions and locked in low wage increases while inflation soared. 

The lengthy strike squeezed the company’s working capital and spurred Boeing to sell equity worth almost $24 billion.