By Niraj Chokshi
Boeing and its primary union seem entrenched for a prolonged struggle—especially as some of the striking employees begin to seek interim work, risking the company’s credit rating slipping to junk levels.
As the strike nears a month, negotiations resurfaced this week between Boeing and the union with federal mediation following a lengthy pause. However, discussions fell apart on Tuesday, with the company retracting its most recent proposal. Both parties exchanged accusations regarding the failure of the talks.
In a communication to workers, Stephanie Pope, CEO of Boeing’s commercial aircraft division, mentioned that the union had set “demands significantly beyond what can be accepted for us to stay competitive as a company.”
The union claimed Boeing was “determined” to adhere to the proposal that labor representatives had once dismissed as inadequate to gain the backing of the majority of its over 33,000 members.
A prolonged strike is the last thing Boeing desires. The firm, which has not posted a full-year profit since 2018, is accruing losses of tens of millions daily as striking employees do not assemble aircraft. The work cessation also coincides with Boeing’s efforts to convince regulators to approve the production of more 737 Max jets, its top-selling model. Moreover, S&P Global Ratings announced on Tuesday that it is weighing the potential downgrade of the company’s credit rating, which is currently just shy of junk status, based on the strike duration.
The strike, initiated on September 13, presents hardships for workers, many of whom are relying on savings and have had to secure health coverage after Boeing removed them from its plan this month.
However, in discussions and on online platforms, numerous workers expressed readiness to endure for a better agreement after feeling discontented with wages that haven’t kept up with increasing living costs and the concessions they accepted in earlier contracts. They are also motivated by achievements that unions in different sectors have attained for their members.
“The union membership is extremely united right now,” stated Rob Tompkins, a quality assurance inspector working on the 777X plane in Everett, Washington. “I’m prepared to stay out until January if necessary.”
The strike commenced in mid-September after workers decisively voted against a four-year preliminary contract negotiated by union leaders and company officials. Boeing made the now-withdrawn offer shortly after, proposing a 30% pay increase and additional benefits, but the union and its members contended that the agreement was insufficient.
A survey of thousands of members at the time revealed that a significant majority were uninterested in the offer, Jon Holden, leader of District 751 of the Machinists union, representing nearly all striking workers, stated in an interview.
“The reality is it didn’t meet our members’ expectations,” he affirmed. “We were never going to endorse that offer.”
Consumer prices in the Seattle region have surged by over 40% throughout the past decade, per federal statistics. The region’s booming tech sector, which includes companies like Amazon and Microsoft, has driven rapid increases in home values, which have more than doubled during that time, according to the Case-Shiller index.
Boeing machinists earn an average annual salary of approximately $75,000, which includes an 8% increase in contractual raises over the last ten years and more than $4 an hour in additional cost-of-living adjustments during that timeframe, according to the company. The union is pushing for a 40% wage increase in a new contract.
“Real estate is the primary expense that has skyrocketed here,” Professor Thomas Gilbert of the University of Washington’s Foster School of Business in Seattle explained. “If salary increments are only 2% or 3% annually compared to real estate, they simply have not kept pace at all.”
Under Boeing’s most recent proposal, starting pay for union members, the majority of whom are based in the Seattle suburbs, would have increased to $20 per hour, and the average machinist would have made over $111,000 annually by the end of the four-year agreement, according to the company. This would have set starting wages roughly at Seattle’s minimum wage, which is set to rise to $20.76 in January.
Numerous Boeing employees are also advocating for alterations to a 2014 agreement wherein union members consented to a contract that froze their pension plan in exchange for Boeing’s promise to retain the production of the 777X in the Seattle region.
Boeing was publicly exploring alternatives for manufacturing the aircraft, designed for international routes. Ultimately, Washington state sanctioned $8.7 billion in subsidies to encourage the firm to preserve the work in the Seattle area.
Several workers conveyed feelings that Boeing had coerced the union into that agreement, even as the company reaped substantial profits. They also voiced dissatisfaction with the union’s international leaders for pushing a vote in early January when some senior workers would have been away on vacation. The union members ratified the deal by a slim 51%-to-49% margin.
“I believe the company significantly miscalculated the level of dissatisfaction among the membership due to the 2014 contract extension,” remarked Andrew DeFreese, a heavy equipment operator at Boeing’s Everett facility. “We have been discussing that ever since it transpired.”
