A Worker holding a picket sign as Boeing employees vote on a new contract from the company on Wednesday, Oct 23, 2024. (AP Photo)
Boeing factory workers have voted to reject the company's latest contract proposal, extending a strike that has now lasted six weeks and disrupted the production of its most popular jetliners.
According to union leaders in Seattle, 64% of the International Association of Machinists and Aerospace Workers (IAM) members turned down the offer. "After a decade of sacrifices, there’s still progress to be made," said Jon Holden, president of IAM District 751. He expressed hope for renewed negotiations. "This is workplace democracy in action, showing the consequences of long-term mistreatment of workers."
Boeing has not commented on the vote, which adds to an already tough year for the company. In January, a door panel flew off a 737 Max during an Alaska Airlines flight, sparking federal investigations. Additionally, the ongoing strike has prevented Boeing from delivering new planes to airlines, a crucial source of revenue. On the same day as the vote, Boeing reported a $6 billion loss for the third quarter.
Union machinists are responsible for assembling the 737 Max, the 777, and the 767 cargo plane at Boeing’s factories in Renton and Everett, Washington. The rejected offer had included a 35% pay increase over four years, which was higher than a previous proposal that promised 25% and led to the strike in the first place. The union originally demanded a 40% raise over three years but adjusted its expectations, claiming the revised deal would result in a 39.8% increase when compounded.
Despite the pay raise, workers expressed concerns about Boeing’s refusal to reinstate a traditional pension plan, which had been frozen for a decade. "The pension should have been the priority," said Larry Best, a 38-year veteran of the company. He and others believe now is the time to push for its return. Another worker, Theresa Pound, who has been with Boeing for 16 years, shared her frustration over higher health costs and insufficient retirement benefits, stating that she may have to work until age 70 to retire comfortably.
The strike, which began on September 13, has been an early challenge for Boeing's new CEO, Kelly Ortberg, who took over in August. In his first remarks to investors, Ortberg acknowledged the need for a "fundamental culture change" at Boeing, laying out his plan to revive the company's fortunes after years of setbacks.
Ortberg, an outsider who previously led Rockwell Collins, highlighted Boeing’s damaged reputation and heavy debt burden. He pointed to the company’s poor performance and declining customer trust but emphasized that Boeing still holds a half-trillion-dollar backlog of airplane orders, a key asset in its recovery. “It will take time, but with the right focus and culture, Boeing can reclaim its legacy,” he said.
Ortberg has already made tough decisions, including announcing layoffs affecting 17,000 employees and revealing a strategy to raise cash to avoid bankruptcy. Boeing has not had a profitable year since 2018, and its recent $6.17 billion loss marked the second-worst quarter in its history. Revenue for the quarter was $17.84 billion, meeting Wall Street expectations, but the company burned through $2 billion in cash, further weakening its financial position.
Boeing’s problems started after two deadly crashes involving its 737 Max jets in 2018 and 2019, which killed 346 people. Safety concerns resurfaced earlier this year with the Alaska Airlines incident, putting the company under renewed scrutiny. Ortberg now faces the challenge of convincing federal regulators that Boeing is improving its safety practices while also dealing with the strike, which is preventing the company from ramping up production of the 737 Max.
In earlier stages of the strike, Boeing had presented what it called its "best and final" offer, which included a 30% pay raise over four years. However, this move angered union leaders, as the company had communicated the proposal directly to workers via the media and set a tight deadline for ratification. After pushback, Boeing allowed more time for negotiations, but workers remained unsatisfied. The company withdrew that proposal on October 9 after talks broke down, leading to the latest offer that was also rejected this week.
The last major strike at Boeing, in 2008, lasted eight weeks and cost the company $100 million a day in deferred revenue. A strike in 1995 stretched on for ten weeks.
