On Wednesday, Boeing machinists voted against a proposed collective bargaining agreement that included a significant pay rise of 35% over the next four years. This vote prolongs a strike that has lasted over five weeks and causes major disruptions to the company’s aircraft production, particularly in the Seattle region.
The rejection came with a stark 64% of voters opposing the deal, which represents yet another challenge for Boeing, a company that already projected continued cash losses into 2025. The company recently reported a substantial quarterly loss of $6 billion—the largest since 2020.
According to S&P Global Ratings, the ongoing strikes are costing Boeing an estimated $1 billion each month.
New CEO Kelly Ortberg stated that reaching an agreement with the machinists is very important to restore the company’s operations after facing numerous issues related to safety and quality over the years. Speaking on CNBC’s “Squawk on the Street,” Ortberg emphasized his commitment to fostering a positive working environment and enhancing relationships within the company.
As part of his strategy, Ortberg is contemplating streamlining Boeing’s operations to concentrate on its core business areas. Recently, he announced plans to reduce the workforce by 10%, cutting approximately 17,000 jobs from the current 170,000 global employees.
The strike impacts over 32,000 machinists based in Oregon’s Puget Sound region who previously rejected a tentative agreement that would have granted them a 25% pay increase. Initially, the International Association of Machinists and Aerospace Workers had sought a 40% wage increase. Notably, this strike marks the first for machinists since 2008.
The most recent proposal, unveiled last Saturday, included increased wages, boosted 401(k) contributions, a $7,000 signing bonus, and various advantageous terms. With rising living costs in the Puget Sound area, workers have expressed the need for better compensation. Several machinists remain upset over the loss of their pension plans from a contract negotiated in 2014, and the latest offer does not address this concern.
Boeing has committed to a new agreement to manufacture its next aircraft within the Pacific Northwest following its decision to relocate all 787 Dreamliner production to a non-union factory in South Carolina.
“While we made considerable progress with this agreement, we still need to do more to satisfy our members’ demands,” stated IAM District 751 President John Holden during a press conference on Wednesday night. He affirmed the union’s intention to return to negotiations.
Boeing chose not to comment on the latest voting outcomes.
This labor dispute adds to the growing list of challenges faced by Boeing. The conflict escalated earlier this year due to an incident involving a door plug incident on a crowded Boeing 737 Max 9, which is the company’s most popular aircraft. This occurrence has drawn renewed regulatory scrutiny.
The ongoing strike coincides with Boeing’s efforts to ramp up production of the 737 and other aircraft models.
Moreover, the extended operational halt poses significant risks to the company’s aerospace supply chain, which was already stressed due to the pandemic. The network of suppliers will need to train new employees swiftly to meet production needs. Last week, Spirit AeroSystems announced it would be furloughing around 700 workers, citing the potential for ongoing layoffs and additional furloughs if the machinists’ strike continues.
