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Boeing employees represented by the International Association of Machinists and Aerospace Workers (IAM) have voted down the latest contract offering proposed by the company in a move that will worsen the financial pain and delay production recovery in its commercial aircraft business.
Sixty-four percent of workers were in favor of continuing the strike after the IAM leadership had decided Oct. 19 to submit the latest Boeing proposal to a membership vote.
“After 10 years of sacrifices, we still have ground to make up, and we’re hopeful to do so by resuming negotiations promptly,” IAM District 751 President Jon Holden said. “This is workplace democracy—and also clear evidence that there are consequences when a company mistreats its workers year after year. Workers across America know what it’s like for a company to take and take—and Boeing workers are saying they are fully and strongly committed to balancing that out by winning back more of what was taken from them by the company for more than a decade.”
Holden also pointed out that union leadership this time did not “recommend for or against this particular proposal.” Bloomberg quoted Holden as saying that “the loss of the pension is still right at the heart of this for many” and that “we’re going to put all cards on the table” to find out how Boeing could compensate for that loss.
The Oct. 19 offer included a 35% pay rise over four years, a $7,000 signing bonus and an improved Boeing contribution to 401(k) retirement plans. The union’s initial demands were for a 40% pay increase and reinstated company pensions, among others. Union leadership recommended an initial tentative deal to its members Sept. 7 that saw a 25% pay increase, but that was overwhelmingly voted down Sept 12. Since then, Boeing’s machinists have been on strike halting production of its commercial aircraft programs.
The strike's ripple effects are having serious impacts on the financially weakened supply chain, with Boeing halting shipments where feasible.
Boeing had no immediate comment. CEO Kelly Ortberg said Oct. 23 just hours before the latest vote concluded that in his plan to turn the company around, “the first and foremost on everybody’s mind today is ending the IAM strike. We have been feverishly working to find a solution that works for the company and meets our employees' needs.” He added that he was “very hopeful that the package we put forward will allow our employees to come back to work so we can immediately focus on restoring the company.”
Ortberg warned that resuming recovery once the strike ends will be a “bumpy” process that includes retraining and recertification of workers on the assembly lines. Nonetheless, Boeing expected a relatively fast return to “normal” production rates—a process that is now delayed further given the latest IAM decision.
Boeing said before the latest vote result became public that it expected to burn $4 billion in cash in the fourth quarter. The company has been trying to mitigate the financial pain by stopping supplier shipments and cutting discretionary spending where possible. As part of a broader exercise to become more efficient, Ortberg announced a 10% reduction of the overall workforce, but made clear that the cuts should not affect production or “technology labs."
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