(SEATTLE) — Blue-collar workers at Boeing took to the picket lines in the Pacific Northwest on Friday, opting to strike rather than assemble aircraft after they decisively rejected a proposed contract that promised a 25% wage increase over four years. The strike, involving 33,000 machinists, is not expected to impact airline flights in the immediate future; however, it is poised to halt production of Boeing’s top-selling jetliners, presenting yet another hurdle for a company grappling with significant financial losses and a tarnished reputation.
In response to the situation, Boeing announced plans to implement cost-saving measures while its CEO explores options for a contract that will meet the union’s approval. Late Friday, the Federal Mediation and Conciliation Service announced it would facilitate renewed negotiations early next week. “FMCS has engaged with both the IAM and Boeing to encourage them to return to the bargaining table and commends their willingness to work towards a mutually agreeable solution,” the agency stated.
Following the announcement of the strike, Boeing’s stock fell by 3.7%, contributing to a nearly 40% drop over the course of the year. The strike commenced after a regional branch of the International Association of Machinists and Aerospace Workers disclosed that, in a Thursday vote, an overwhelming 94.6% of participating members rejected the contract proposal that had been supported by the union's bargaining committee, with 96% voting in favor of the strike.
As the clock struck midnight, striking workers gathered outside the Boeing factory in Renton, Washington, brandishing signs that read, “Have you seen the damn housing prices?” The atmosphere was charged with energy as car horns blared and a boom box played anthems like Twisted Sister’s “We’re Not Gonna Take It” and Taylor Swift’s “Look What You Made Me Do.”
Many workers expressed to reporters that the wage offer from Boeing fell short, especially considering the rising cost of living in the Pacific Northwest. John Olson, a toolmaker with six years at Boeing, noted that his salary had only increased by 2% during his tenure. “The last contract we negotiated was 16 years ago, and the company is basing the wage increases on figures from that time,” the 45-year-old said. “They don’t even keep pace with inflation.”
Other employees voiced their dissatisfaction with Boeing’s decision to alter the criteria for calculating annual bonuses. Currently, machinists earn an average salary of $75,608 per year, excluding overtime, which was projected to rise to $106,350 by the end of the rejected four-year contract. This contract would have included $3,000 lump-sum payments and a reduction in health care costs alongside the proposed pay raises. Additionally, Boeing addressed a significant union request by pledging to manufacture its next new plane in Washington state.
However, the offer did not meet the union’s initial demand for a 40% wage increase over three years. The union also sought to reinstate traditional pensions that had been eliminated a decade ago but ultimately agreed to an increase in Boeing's contributions to 401(k) retirement accounts, capped at $4,160 per worker.
Jon Holden, president of IAM District 751, stated that the union plans to survey its members to determine which issues should be prioritized in the upcoming negotiations. In response to the strike, Boeing indicated its readiness to return to the bargaining table to work towards a new agreement.
“The message is clear: the tentative agreement we reached with IAM leadership did not meet the approval of the members,” Boeing stated in a recent announcement. The company emphasized its commitment to rebuilding its relationship with both employees and the union. Boeing’s Chief Financial Officer, Brian West, expressed disappointment during an investor conference in California, noting that while a deal had been secured with union leaders, it was ultimately rejected by the rank-and-file workers.
The strike presents significant financial challenges for Boeing, particularly as airlines typically pay a large portion of the purchase price upon receiving new aircraft. West mentioned that Boeing, which carries approximately $60 billion in total debt, is exploring strategies to conserve cash during this period. He refrained from providing a financial impact estimate, as it hinges on the strike's duration.
Prior to the strike, new CEO Kelly Ortberg had sought feedback from employees on the factory floors and is actively working towards an agreement that addresses their concerns, according to West. White House Press Secretary Karine Jean-Pierre stated that officials from the Biden administration have reached out to both Boeing and the union, advocating for good faith negotiations that would yield benefits for employees and strengthen the company.
Boeing's year has been marked by difficulties, including a panel failure that left a significant hole in one of its passenger jets and a NASA mission where two astronauts were left in space due to issues with a Boeing spacecraft. The challenges continue to mount as the company seeks to navigate this latest setback.
The striking machinists are responsible for assembling Boeing’s top-selling aircraft, including the 737 Max, 777 jet, and 767 cargo plane. However, production of the Boeing 787 Dreamliners, which are manufactured by nonunion workers in South Carolina, is expected to continue uninterrupted during the walkout. This strike poses yet another obstacle for new CEO Kelly Ortberg, who has only been on the job for six weeks and is tasked with reviving a company that has faced over $25 billion in losses over the past six years, trailing behind its European competitor Airbus.
In a last-ditch effort to negotiate a deal supported unanimously by union leaders, Ortberg warned machinists on Wednesday that “no one wins” in a strike, stressing that such an action could jeopardize Boeing’s recovery and damage its reputation among airline customers. “It’s no secret that we’re in a challenging period, partly due to our past mistakes,” he acknowledged. “I believe that we can recover together, but a strike would undermine our progress, eroding trust with our clients and complicating our future.”
Union leader Jon Holden emphasized the machinists’ frustration over stagnant wages and concessions made since 2008 regarding pensions and health care to keep jobs from relocating. “This is about respect, our history, and fighting for our future,” Holden stated during the strike announcement.
The potential suspension of airplane production could have significant financial implications for Boeing, especially depending on the duration of the strike. The last strike in 2008 lasted eight weeks, costing the company approximately $100 million per day in deferred revenue, while a previous strike in 1995 extended for 10 weeks.