Boeing Offers 35% Pay Increase in Deal to End Machinists’ Strike \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ Boeing and the International Association of Machinists and Aerospace Workers have negotiated a new contract proposal to end the ongoing strike that has halted airplane production for over a month. The proposal offers a 35% pay increase over four years, up from 30%, and raises the ratification bonus to $7,000 per worker. While the deal does not restore the traditional pension plan, it enhances Boeing’s contributions to 401(k) plans and retains performance bonuses. The union plans to hold a ratification vote on Wednesday.
Boeing, Union Strike Tentative Deal to End Walkout: Quick Looks
- Pay increase: The new offer increases pay by 35% over four years, up from 30%.
- Bonuses: Ratification bonus raised to $7,000 per worker.
- Retirement plan: No traditional pension, but enhanced 401(k) contributions from Boeing.
- Performance bonuses: Boeing retains performance bonuses at 4% of pay.
- Ratification vote: Union members will vote on the deal on Wednesday.
Deep Look
Boeing and the International Association of Machinists and Aerospace Workers (IAM) have reached a new contract proposal that aims to end the month-long strike that has crippled production at Boeing’s major plants in Washington state, Oregon, and California. The strike, which began on September 13, involved about 33,000 union members demanding better wages, benefits, and pensions.
The union announced early Saturday that it plans to hold a ratification vote on Wednesday, signaling potential progress in resolving the labor dispute. The new proposal includes a 35% wage increase over four years, an improvement from the 30% raise that Boeing had offered in the previous month’s negotiations. The ratification bonus for workers was also raised to $7,000 per employee, compared to the initial offer of $6,000.
Contract Highlights
While the new proposal addresses several worker demands, one of the key sticking points—restoration of the traditional pension plan—remains unresolved. The union had been pushing for the return of a pension plan that was phased out in 2016. However, Boeing has refused to restore this benefit, opting instead to enhance contributions to workers’ 401(k) retirement plans. According to the union, the new offer will see Boeing increase its matching contributions, providing a more robust 401(k) benefit for workers.
In addition, the new deal retains performance bonuses, which Boeing had initially sought to eliminate. These bonuses will be set at a minimum of 4% of workers’ pay, offering an added financial incentive based on company performance.
Union’s Response
Union leaders, while stopping short of fully endorsing the new proposal, have indicated that the offer is “worthy of your consideration” and have praised the improved terms as a victory for the striking workers. In a joint statement, IAM district presidents Jon Holden and Brandon Bryant said, “The fact the company has put forward an improved proposal is a testament to the resolve and dedication of the frontline workers who’ve been on strike — and to the strong support they have received from so many.”
Boeing, for its part, expressed optimism about the ratification vote, stating, “We look forward to our employees voting on the negotiated proposal.”
The union credited acting U.S. Labor Secretary Julie Su for helping to mediate the latest round of negotiations. Su met with Boeing and union representatives in Seattle earlier this week, underscoring the Biden administration’s concern over the strike’s economic impact on both the aerospace industry and the wider economy.
Strike’s Toll on Boeing and Suppliers
The strike has severely impacted Boeing’s operations, halting the production of key airplane models, including the 737 Max, 767, and 777, which are primarily built in unionized plants in Washington state. Boeing has been able to continue production of its 787 Dreamliner at its nonunion facility in South Carolina, but the disruption caused by the strike has led to significant delays and financial strain.
Boeing’s new CEO, Kelly Ortberg, recently announced plans to lay off about 17,000 workers and explore raising up to $25 billion through new stock or debt offerings to stabilize the company’s finances during the strike. The prolonged walkout has further squeezed Boeing’s supply chain, with major suppliers such as Spirit AeroSystems already feeling the impact.
Spirit AeroSystems, which manufactures fuselages and other components for Boeing, has announced plans to furlough 700 workers for three weeks beginning later this month. The company has warned that it may have to resort to layoffs if the strike extends beyond November. This ripple effect highlights the broader economic ramifications of the Boeing strike, as suppliers face disruptions in production schedules and revenue losses.
Ratification Vote on Wednesday
With Wednesday’s ratification vote looming, the outcome remains uncertain. Union members have previously rejected Boeing’s proposals, with more than 94% voting against a deal in September, despite support from union leadership. Chastened by that rejection, union leaders declined to put another Boeing offer to a vote in early October.
The vote on the new contract will not only determine the future of the strike but also provide clarity on when workers might return to their jobs. Union leaders have said that specific details, including the timeline for workers’ return, will be part of Wednesday’s vote.
What’s at Stake for Boeing
The ongoing strike represents a critical challenge for Boeing, as the company struggles to recover from the financial losses caused by the COVID-19 pandemic, as well as safety and production issues related to the 737 Max. The labor dispute has added another layer of complexity to the company’s efforts to ramp up production and deliver on its backlog of orders.
The resolution of the strike would allow Boeing to restart its full production operations and meet the growing demand for commercial airplanes. However, the financial damage caused by the walkout, along with the potential layoffs and stock or debt offerings, underscores the difficult road ahead for the aerospace giant.
Looking Ahead
However, if the proposal is rejected, the strike could drag on, further delaying production and exacerbating the financial strain on both Boeing and its workforce. As Boeing seeks to stabilize its operations and meet customer demand, the outcome of the ratification vote will be a crucial moment for the company and its future.
