No end for Boeing labor strike as workers reject latest contract proposa

[October 24, 2024]  By DAVID KOENIG and MANUEL VALDES

SEATTLE (AP) — Boeing factory workers voted against the company’s latest contract offer and remain on the picket lines six weeks into a strike that has stopped production of the aerospace giant’s bestselling jetliners.

Local union leaders in Seattle said 64% of members of the International Association of Machinists and Aerospace Workers who cast ballots Wednesday voted against accepting the contract offer.

“After 10 years of sacrifices, we still have ground to make up, and we’re hopeful to do so by resuming negotiations promptly,” Jon Holden, the head of the IAM District 751 union, said in a statement Wednesday evening. “This is workplace democracy — and also clear evidence that there are consequences when a company mistreats its workers year after year."

A spokesperson for Boeing said officials didn’t have a comment on the vote.

The labor standoff comes during an already challenging year for Boeing, which became the focus of multiple federal investigations after a door panel blew off a 737 Max plane during an Alaska Airlines flight in January.

The strike has deprived the company of much-needed cash that it gets from delivering new planes to airlines. On Wednesday, the company reported a third-quarter loss of more than $6 billion.

Union machinists assemble the 737 Max, Boeing’s best-selling airliner, along with the 777 or “triple-seven” jet and the 767 cargo plane at factories in Renton and Everett, Washington.

The latest rejected offer included pay raises of 35% over four years. The version that union members rejected when they voted to strike last month featured a 25% increase over four years.

The union, which initially demanded 40% pay boosts over three years, said the annual raises in the revised offer would total 39.8%, when compounded.

Boeing has said that average annual pay for machinists is currently $75,608.

Boeing workers told Associated Press reporters that a sticking point was the company’s refusal to restore a traditional pension plan that was frozen a decade ago.

“The pension should have been the top priority. We all said that was our top priority, along with wage,” Larry Best, a customer-quality coordinator with 38 years at Boeing, said on a picket line outside a Boeing factory in Everett, Washington. “Now is the prime opportunity in a prime time to get our pension back, and we all need to stay out and dig our heels in.”

Theresa Pound, a 16-year Boeing veteran, also voted against the deal. She said the health plan has gotten more expensive and her expected pension benefits would not be enough, even when combined with a 401(k) retirement account.

“I have put more time in this place than I was ever required to. I have literally blood, sweat and tears from working at this company,” the 37-year-old said. “I’m looking at working until I’m 70 because I have this possibility that I might not get to retire based on what’s happening in the market.”

The strike started Sept. 13 and has served as an early test for Boeing CEO Kelly Ortberg, who became chief executive in August.

In his first remarks to investors, Ortberg said earlier Wednesday that Boeing needs “a fundamental culture change,” and he laid out his plan to revive the aerospace giant after years of heavy losses and damage to its reputation.

Ortberg repeated in a message to employees and on the earnings call that he wants to “reset” management’s relationship with labor “so we don’t become so disconnected in the future.” He said company leaders need to spend more time on factory floors to know what is going on and “prevent the festering of issues and work better together to identify, fix, and understand root cause.”

Boeing employees, including assembler Tyrone Hipolito, center, work the picket line after union members voted to reject a new contract offer from the company, Wednesday, Oct. 23, 2024, in Renton, Wash. (AP Photo/Lindsey Wasson)

Ortberg, a Boeing outsider who previously ran Rockwell Collins, a maker of avionics and flight controls for airline and military planes, said Boeing is at a crossroads.

“The trust in our company has eroded. We’re saddled with too much debt. We’ve had serious lapses in our performance across the company, which have disappointed many of our customers,” he said.

But Ortberg also highlighted the company’s strengths, including a backlog of airplane orders valued at a half-trillion dollars.

“It will take time to return Boeing to its former legacy, but with the right focus and culture, we can be an iconic company and aerospace leader once again,” he said.

In recent weeks, Ortberg announced large-scale layoffs — about 17,000 people — and a plan to raise enough cash to avoid a bankruptcy filing.

Boeing hasn’t had a profitable year since 2018, and Wednesday’s numbers represented the second-worst quarter in the manufacturer’s history. Boeing lost $6.17 billion in the period ended Sept. 30, with an adjusted loss of $10.44 per share. Analysts polled by Zacks Investment Research had expected a loss of $10.34 per share.

Revenue totaled $17.84 billion, matching Wall Street estimates.

The company burned nearly $2 billion in cash, in the quarter, weakening its balance sheet, which is loaded down with $58 billion in debt. Chief Financial Officer Brian West said the company will not generate positive cash flow until the second half of next year.

Boeing’s fortunes soured after two of its 737 Max jetliners crashed in October 2018 and March 2019, killing 346 people. Safety concerns were renewed this January, when a panel blew off a Max during an Alaska Airlines flight.

Ortberg needs to convince federal regulators that Boeing is fixing its safety culture and is ready to boost production of the 737 Max — a crucial step to bring in much-needed cash. That can’t happen, however, until the striking workers return to their jobs.

Early in the strike, Boeing made what it termed its “best and final” offer. The proposal included pay raises of 30% over four years, and angered union leaders because the company announced it to the striking workers through the media and set a short ratification deadline.

Boeing backed down and gave the union more time. However, many workers maintained the offer still wasn’t good enough. The company withdrew the proposed contract on Oct. 9 after negotiations broke down, and the two sides announced the latest proposal on Saturday.

Charles Fromong, a mechanic who has worked at Boeing for 38 years, said Wednesday night after the results were announced that the company needs to take care of its workers.

“I feel sorry for the young people,” he said. “I’ve spent my life here and I’m getting ready to go, but they deserve a pension and I deserve an increase.”

The last Boeing strike, in 2008, lasted eight weeks and cost the company about $100 million daily in deferred revenue. A 1995 strike lasted 10 weeks.

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Koenig reported from Dallas. Lindsey Wasson in Everett, Washington, contributed to this report.

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