SEATTLE — Workers at Boeing factories have rejected the company’s latest contract proposal, continuing their strike that has now lasted six weeks and significantly hampered the production of the company’s most popular jetliners.
According to local union leaders in Seattle, approximately 64% of the members of the International Association of Machinists and Aerospace Workers voted against the contract offer during a ballot held on Wednesday.
Jon Holden, the leader of IAM District 751, expressed hope for renewed negotiations, emphasizing that the workforce has made sacrifices over a decade and still has much to reclaim. “This is a matter of workplace democracy, which serves as clear evidence that negative treatment from the company has its consequences,” Holden stated.
While Boeing did not provide any comments about the vote, the timing of this labor dispute is particularly challenging for the aerospace company, which has been under scrutiny due to multiple federal investigations following an incident in January when a door panel detached from a 737 Max aircraft during a flight with Alaska Airlines.
The ongoing strike is taking a toll on Boeing’s finances, as the company loses out on critical revenue from new aircraft deliveries. Recently, Boeing reported a staggering loss of more than $6 billion for the third quarter, underscoring the financial pressures it is facing.
Union machinists are responsible for assembling several aircraft models, including the 737 Max, which is Boeing’s best-selling airliner, as well as the 777 and the 767 cargo plane at facilities located in Renton and Everett, Washington.
The most recent contract proposal that was rejected included pay increases totaling 35% over four years, while the initial proposal that led to the current strike was for a 25% increase within the same timeframe. The union’s original demand sought a 40% salary boost across three years, later adjusted to state that the revised proposal would yield an almost 40% increase when compounded annually.
Boeing representatives have stated that the average annual compensation for machinists stands at around $75,608. However, union members have indicated that a significant sticking point in negotiations is the company’s refusal to reinstate a traditional pension plan that was frozen a decade ago.
On the picket line, Larry Best, a seasoned Boeing employee with 38 years at the company, emphasized the importance of restoring the pension plan. “This should be a top priority, along with wage increases,” he remarked, as he voiced concerns about the current climate for employees.
Another worker, Theresa Pound, who has dedicated 16 years to Boeing, also voted against the contract. She highlighted rising health plan costs and expressed worries that her anticipated pension, even when added to her 401(k), would not be sufficient for her retirement. “I’ve invested so much of my life into this company, and my future looks uncertain,” said the 37-year-old.
The strike commenced on September 13, marking an early challenge for Boeing’s new CEO, Kelly Ortberg, who took over the position in August. Ortberg, in his initial address to investors, acknowledged the need for a “fundamental culture change” within the company, while outlining strategies to help restore Boeing’s legacy after a series of losses and reputational damage.
He emphasized the necessity of strengthening management’s relationship with labor to avoid future disconnection and emphasized that company leaders need to be more present on the factory floor to tackle ongoing issues proactively.
Ortberg, who has prior experience at Rockwell Collins, a manufacturer of avionics and flight control systems, pointed out that Boeing is at a crucial juncture. He noted that trust in the company has dwindled, citing high levels of debt and disappointing performance across various sectors.
Despite the challenges, Ortberg highlighted Boeing’s substantial backlog of airplane orders, which is valued at around half a trillion dollars. “Reviving Boeing’s reputation will take time, but with focused effort, we have the potential to restore our status as a leader in aerospace,” he stated.
In the most recent weeks, the company has announced significant layoffs, impacting roughly 17,000 employees, as part of a push to improve financial standing and avoid bankruptcy proceedings.
Since 2018, Boeing has not recorded a profitable year, and the recent figures reflect the second-largest quarterly loss in the company’s history. For the quarter ending September 30, Boeing faced a loss of $6.17 billion, reporting an adjusted loss of $10.44 per share, which was slightly worse than analysts’ predictions. Total revenue for the quarter met Wall Street expectations at $17.84 billion.
The company experienced a substantial cash depletion of nearly $2 billion during this quarter, further weakening its financial position in light of its $58 billion debt load. The CFO mentioned that the company is not expected to generate positive cash flow until the latter half of the following year.
Boeing’s difficulties began after two tragic crashes of its 737 Max aircraft in late 2018 and early 2019, resulting in the death of 346 individuals. Safety concerns were reignited earlier this year when a panel detached from a 737 Max during a flight, intensifying scrutiny on the company.
For Ortberg, addressing safety culture and demonstrating that Boeing is prepared to ramp up production of the 737 Max is crucial for restoring financial health. However, this cannot be accomplished without the return of the striking workers to their positions.
Initially, Boeing had declared its last and best offer to the union, which included pay increases of 30% over four years, a move that faced criticism for being announced publicly rather than directly to striking employees and for its short acceptance deadline. Although Boeing later extended the deadline, many employees felt that the offer remained inadequate. The contract offer was withdrawn on October 9, following a breakdown in discussions, leading to the proposal that was recently voted on.
Charles Fromong, a long-time mechanic at Boeing, expressed his concern following the vote, stating that the company needs to prioritize the welfare of its workforce. “I feel for the younger generation in our workforce,” he said. “I may be nearing retirement, but they should be guaranteed a pension, and I certainly deserve a raise.”
Historically, strikes at Boeing have had significant economic impacts; the last major walkout in 2008 lasted eight weeks and incurred about $100 million per day in lost revenue. A previous strike in 1995 endured for ten weeks.