Boeing Employees Strike After Rejecting 25% Pay Increase, Impacting Production

OAN

Boeing employees walked off the job site at Boeing Factories near Seattle on Friday morning after union members voted to go on strike and reject a tentative contract that would have increased wages by 25% over a four-year span. 

The official walkout started at 12:01 a.m. PDT, just three hours after the local branch of the International Association of Machinists and Aerospace Workers announced over 94% of voting workers rejected the proposed contract and 96% voted in favor of the work stoppage, going over the two-thirds requirement. 

Currently, the airplane production company has a total of 150,000 U.S. employees, and it estimates that its own annual contribution to America’s economy equates to around $79 billion, supporting 1.6 million jobs directly and indirectly. 

“This is about fighting for our future,” Jon Holden, president of the largest IAM local at Boeing, said as he announced the vote results. “We will be back at the table whenever we can get there to drive forward on the issues our members say are important.”

Meanwhile, Boeing representatives said they were eager to return to the negotiating table in order to reach a new deal if need be.

“The message was clear that the tentative agreement we reached with IAM leadership was not acceptable to the members,” it said in a statement. “We remain committed to resetting our relationship with our employees and the union.”

The machinists make $75,608 per year on average, not counting overtime, and that would increase to $106,350 at the end of the four-year contract, according to Boeing. 

The deal fell short of the union’s initial demand for pay raises of over 40% over three years. The union also wanted to restore traditional pensions that were axed a decade ago, but settled for an increase in Boeing contributions to employee’s 401(k) retirement accounts. 

In response, Boeing commented on the strike, saying it was “ready to get back to the table to reach a new agreement.”

“The message was clear that the tentative agreement we reached with IAM leadership was not acceptable to the members. We remain committed to resetting our relationship with our employees and the union,” the company said in a statement.

However, Boeing has had a series of mishaps with their planes, from a panel blowing out and leaving a massive hole in one of its passenger jets in January, as well as NASA leaving two astronauts in space rather than sending them home on a “problem-plagued” Boeing Starliner spacecraft. 

Boeing’s reputation plummeted after two 737 Max airliners crashed in 2018 and 2019, killing 346 people.

These issues will be a major challenge for Boeing’s new CEO, Kelly Ortberg, who was given the new role six weeks ago in the hopes of turning the company around as it has lost over $25 billion in the past six years, and is now trailing behind European rival Airbus. 

Nevertheless, Ortberg pleaded with employees, asserting that the recovery of Boeing would be in question if the strike were to take place. 

“For Boeing, it is no secret that our business is in a difficult period, in part due to our own mistakes in the past,” Ortberg said. “Working together, I know that we can get back on track, but a strike would put our shared recovery in jeopardy, further eroding trust with our customers and hurting our ability to determine our future together.”

Additionally, if the strike were to go into the holiday season, it could cost Boeing up to $3.5 billion in cash flow because the company earns close to 60% of the sale price when it delivers a plane to the buyer, TD Cowen aerospace analyst Cai von Rumohr said. 

Union negotiators unanimously recommended that workers approve the tentative contract reached over the weekend. Meanwhile, many union members are still frustrated by previous benefits on pensions, health care, and pay. 

“They are upset. They have a lot of things they want. I think Boeing understands that and wants to satisfy a fair number of them,” said von Rumohr. “The question is, are they going to do enough?”