By Niraj Chokshi
Members of the largest union at Boeing ratified a new agreement on Monday, bringing an end to a weeks-long strike that was among the most financially impactful work stoppages seen in decades.
The contract received approval from 59% of the voting members, as reported by the union, the International Association of Machinists and Aerospace Workers, which represents approximately 33,000 employees, predominantly engaged in manufacturing commercial airplanes in the Seattle region. Over 75% of the membership participated in the vote.
The union indicated that members, who had previously rebuffed two earlier contract proposals from Boeing, could recommence work as early as Wednesday, with a mandatory return by Nov. 12. The strike commenced on September 13 after the union dismissed the company’s initial offer.
“You persevered, you stood firm, and you succeeded. This is a triumph,” remarked Jon Holden, president of District 751 of the Machinists union, representing the majority of workers covered by the proposed contract.
The new agreement will enhance wages by over 43% cumulatively over the coming four years, an advancement beyond the two earlier proposals. The initial offer suggested an increase of just over 27%.
Union leaders, alongside Boeing, had encouraged workers to approve the agreement. Leadership from the union cautioned that subsequent proposals from the company might not be as favorable as this one.
In a statement, Boeing’s CEO Kelly Ortberg expressed his contentment regarding the conclusion of the negotiations. “Although the preceding months have been challenging for us all, we form one team,” he stated. “We can only progress by collaborating and listening to each other.”
Since joining the company in August, Ortberg has sought to rehabilitate Boeing’s reputation and operations following various setbacks. Recently, he revealed intentions to eliminate around 17,000 positions, equating to 10% of the company’s global workforce, alongside other restructuring measures.
Boeing disclosed a loss exceeding $6.1 billion in the quarter ending September. Last week, the company raised in excess of $21 billion by selling shares to investors to bolster its financial standing and avert a downgrade of its investment-grade credit rating. Both Moody’s and Fitch Ratings labeled the fundraising endeavor as a positive measure while still evaluating the potential downgrade of Boeing’s credit rating to “junk” status, a change that could elevate its borrowing expenses.
Contentious discussions characterized the contract negotiations as workers voiced discontent with the company’s management. Many employees continued to harbor resentment from labor negotiations a decade ago, during which the union allowed Boeing to implement a freeze on a pension plan that guaranteed monthly retirement distributions. Despite the company likely being unwilling to reinstate that pension, workers sought improved benefits in other areas of the contract as compensation for that concession.
Biden administration officials closely followed the negotiations that commenced in March. After talks collapsed last month, officials assisted in reconvening both parties. Both Boeing and the union acknowledged the acting labor secretary, Julie Su, who made three trips to Seattle, for her role in facilitating the negotiations that led to the agreement.
President Joe Biden extended his congratulations to Boeing and the union in a statement. “Beneficial contracts are advantageous for workers, companies, and consumers alike,” he stated.
Besides the wage increases, the new contract features a $12,000 ratification bonus, significantly higher than the bonus in the initial proposal. The agreement stipulates enhanced retirement benefits and a pledge from Boeing to manufacture its next commercial aircraft in the Seattle area.
“Such a commitment has never been made before. They’ve never promised us an airplane program ahead of its launch and design,” Holden stated at a news conference following the announcement of the results.
Boeing has indicated that the average annual salary for machinists will surpass $119,000 by the conclusion of the contract, up from nearly $76,000 today, when accounting for these raises and additional benefits.
The financial impact of the strike is comparable to those involving employees at General Motors in 1998 and UPS in 1997, as per an assessment by Anderson Economic Group, a Michigan-based research and consulting firm. Boeing reportedly incurred at least $5.5 billion in lost earnings within the first six weeks of the strike, according to the firm, with the total economic impact exceeding $9.6 billion, considering the effects on Boeing’s suppliers and clients.
In response to the strike, Boeing implemented several cost-reduction strategies, such as halting certain expenditures and enacting temporary furloughs for tens of thousands of other staff members. Several of the company’s suppliers have adopted similar measures.
This contract supersedes a 2008 agreement that was reached after a two-month strike and had been altered and extended multiple times since. That earlier strike led to a decline in Boeing’s revenue by approximately $6.4 billion due to the company delivering 104 fewer planes than anticipated that year.
Most of the employees who participated in the strike were situated at manufacturing facilities in the Seattle area, where Boeing produces several commercial aircraft, including its most widely used jet, the 737 Max. The Max constitutes three-fourths of the 6,200 aircraft Boeing has on order, yet production levels fell significantly short of company targets due to a crisis that arose in January when a panel detached from a Max aircraft during an Alaska Airlines flight.
This incident reignited scrutiny regarding the quality and safety of Boeing planes five years after two deadly accidents involving the Max. In reaction to the panel detachment, the Federal Aviation Administration capped production of the Max to 38 planes monthly. Prior to the strike, production was already below that cap.
