Boeing secures agreement with union to prevent labor action
The proposed agreement requires the approval of the union's rank-and-file members, who construct commercial jets. However, the union leadership has commended the tentative deal, asserting that it fulfills the union's objectives.
The International Association of Machinists and Aerospace Workers expressed pleasure in their role on Sunday in a statement posted on their official website, stating, "You sent us here to stand strong for your priorities, and we are proud to have done so."
According to Boeing, the agreement offers wage increases equating to 25% over the contract's four-year duration, improved contributions to 401(k) plans, reduced health insurance contributions from employees, and increased time off.
The agreement represents the largest pay raise for Boeing union members.
Commenting on the agreement, Stephanie Pope, CEO of Boeing's commercial airplane division, stated, "We've heard what's important to you for the new contract. And we have reached a tentative agreement with the union on a historic offer that takes care of you and your family."
In addition to the financial benefits, the agreement ensures increased job security for union members, with a commitment to build the next new aircraft at a union-represented plant in the Puget Sound region. Boeing operates a nonunion plant in South Carolina where they manufacture the 787 Dreamliner. In the previous two contract negotiations with Boeing, the union was compelled to make concessions, such as the termination of the traditional pension plan and increased employee contributions to health care, in exchange for the company reconsidering the construction of the 737 Max and 777X jets at new nonunion plants.
The agreement applies to production workers responsible for building Boeing's commercial jets at three facilities in the Seattle area, as well as approximately 1,200 employees at Boeing's parts plant in Portland, Oregon. Union members will have an opportunity to vote on the tentative agreement on Thursday, with the possibility of a no vote potentially leading to a strike. However, the union leadership encourages members to support the agreement.
Problems at Boeing
Boeing has experienced a series of challenges over the past five years. Commencing with a 20-month grounding of its best-selling plane, the 737 Max, in 2019 and 2020, following two fatal crashes linked to a design flaw in the aircraft. Furthermore, Boeing's revenue decreased dramatically during the pandemic due to a significant drop in air travel, leading to substantial losses for its airline customers. Additionally, a door plug blew off a 737 Max operated by Alaska Airlines just 10 minutes into a flight in January 2021, even though no one was harmed, it brought renewed attention to quality and safety issues at Boeing, particularly after it was discovered that the aircraft in question had left the factory without the necessary four bolts to secure the door plug.
As a result of these issues, Boeing reported core operating losses totaling $33.3 billion since the grounding of the Max in 2019, and forecasts indicate that losses will continue through the remainder of this year. Due to the significant increase in borrowing to cover these losses during this period, Boeing is in danger of having its debt downgraded to junk bond status.
This contrasts starkly with the financial situations of other significant companies that secured lucrative union agreements last year, such as UPS, General Motors, Ford, and Stellantis, which reported record earnings prior to these negotiations.
Union's Strength in Negotiations
However, Boeing's troubled financial situation meant it could not risk a strike for the first time in 16 years.
"Financially, the company finds itself in a tough position due to many self-inflicted missteps," said Jon Holden and Brandon Bryant, the presidents of the two union locales at Boeing, "Finally, in a position of great leverage, we used every ounce of power we could to go after everything you said was important. We did not get everything we wanted, but you all can be proud of your strength, solidarity, and unity because you have achieved the best contract we have ever had."
Company executives acknowledged the union's leverage in the negotiations during the final round. Dave Calhoun, former CEO, had informed investors in July that Boeing's aim was to avoid a strike and seemed to suggest the company was prepared to go to great lengths to prevent a work stoppage.
His successor, Kelly Ortberg, who assumed the position on August 8, issued a statement in his initial week expressing a desire to "reset" relations with the union following a meeting with their leadership.
This story has been updated with additional information.
The tentative agreement, if approved, will significantly impact the business operations of Boeing, affecting both the company and its union members. The proposed deal includes substantial wage increases, improved retirement plans, and reduced health insurance costs for the employees, potentially stimulating business growth and worker satisfaction.
