Boeing’s U.S. West Coast factory workers accepted a new contract offer on Monday, effectively ending a bitter seven-week strike that halted most jet production and deepened the financial crisis at the troubled planemaker. The union reported that members voted 59% in favor of the new contract, which includes a 38% pay rise spread over four years. This outcome alleviates pressure on new Boeing CEO Kelly Ortberg, following two previous offers that had been rejected. “This is a victory. We can hold our heads high,” said Jon Holden, the union’s lead negotiator, to members after the results were announced.
“Now it’s our job to get back to work.” The conclusion of this strike—the first in 16 years by Boeing’s largest union—provides welcome relief for a company that has faced numerous challenges since a door panel blew off a near-new plane in mid-air in January. In a message to Boeing employees after the vote, Ortberg expressed his satisfaction with the union’s ratification of the deal. “While the past few months have been difficult for all of us, we are all part of the same team,” he stated. “There is much work ahead to return to the excellence that made Boeing an iconic company.”
Approximately 33,000 machinists who work on Boeing’s best-selling aircraft, as well as the 767 and 777 widebodies, had been on strike since September 13, demanding a 40% wage increase and the restoration of a defined-benefit pension plan that was replaced with a 401(k) retirement plan a decade ago. “I’m ready to get back to work,” said David Lemon, a worker in equipment calibration certification in Seattle, who voted in favor of the contract. He calculated that the combination of the pay hike and a 4% bonus— the guaranteed minimum annual payout from the reinstated incentive plan— amounted to the sought-after 40% increase.
“We got there,” he noted. Although the old pension will not be restored, workers will see an increase in company matching contributions for their 401(k) plans. Boeing also committed to building the next airplane in the Seattle area, a promise not previously made before the launch of a new aircraft, according to Holden.
President Joe Biden and Acting Labor Secretary Julie Su, who facilitated the contract negotiations, congratulated both the workers and the company on this positive outcome. “We’ve shown that collective bargaining works,” Biden stated. Biden has been particularly supportive of unions during his presidency, and the timing of the union vote coincided with national elections as Americans prepared to select his successor.
SLOW RAMP-UP
Boeing will require weeks to ramp up plane production and improve cash flow, with output for the best-selling models expected to remain in the single digits per month for some time—far below the 38 per month target set before the strike.
Workers will begin returning to production on Wednesday, according to the International Association of Machinists and Aerospace Workers (IAM), although Boeing has warned that some workers may need retraining after their extended absence from the factory floor. The strike was costing Boeing approximately $100 million a day in lost revenue, prompting the company to raise $24 billion from investors last week to preserve its investment-grade credit rating.
Ortberg now faces the challenge of repairing relationships with machinists in the Pacific Northwest, who have used the strike to express frustrations built up over the past decade, during which wages have not kept pace with inflation and the cost of living in the Seattle area has soared. The union has reported that its members received only four 1% wage increases over the last eight years. “I’m demoralized, to say the least,” lamented Thomas Amilowski, a 777 worker who voted against the contract.
He criticized the union leadership for adopting a “defeatist mindset” after initially backing an offer that was overwhelmingly rejected by nearly 95% of members. Holden acknowledged that the 59% approval rating indicates there were some who were dissatisfied with the vote, but he added that workers should focus on rebuilding relationships with Boeing leadership.
Boeing has stated that, by the end of the new four-year contract, the average annual salary for machinists will rise to $119,309, up from $75,608 previously. This pay increase may add approximately $1.1 billion to Boeing’s wage bill over the four years. Additionally, a $12,000 ratification bonus for each union member could result in an additional $396 million in outflows, according to analysts at Jefferies. More than 26,000 union members participated in the vote, resulting in a turnout near 80%.
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