SEATTLE (AP) — Boeing factory workers voted Wednesday to reject the company’s latest contract offer and to continue a six-week strike that has halted 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 voted against accepting the proposal.
“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 offer rejected Wednesday 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 worse, with higher premiums and more out-of-pocket expenses, 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, which began Sept. 13, 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.”
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.
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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.
Shares of The Boeing Co. fell 2% in regular trading Wednesday.
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.
Boeing workers reject the company's latest proposal, which included a 35% wage hike
Shubhangi Goel
Wed, October 23, 2024
Boeing workers just rejected a proposal with a 35% wage increase over four years.
The strike has halted most of Boeing's manufacturing for over five weeks.
Boeing's earnings missed analyst expectations by over 18% amid the ongoing strike.
Boeing machinists have rejected a new proposal that included a 35% wage increase over four years, the International Association of Machinists and Aerospace Workers Local 751 said Wednesday.
The strike has been going on for five weeks and has halted most of the plane maker's manufacturing.
Along with the wage hike, the new proposal raised a signing bonus from $3,000 to $7,000. It was rejected by 64% of union workers, according to the IAM.
"After 10 years of sacrifice, we still have ground to make up. We hope to resume negotiations promptly," the IAM said in a statement on X on Wednesday.
Boeing reported third-quarter earnings on Wednesday, with a net loss of over $6 billion. This brings the company's total losses in 2024 to nearly $8 billion.
CEO Kelly Ortberg, who joined in August, addressed the stoppage on Wednesday's earnings call.
"First and foremost on everybody's mind today is ending the IAM strike. We've been feverishly working to find a solution that works for the company and meets our employees' needs," Ortberg said.
The strike, which started on September 13, began after workers rejected a proposal to raise pay by 25% over four years, demanding 40%. The company's second offer of 30% was withdrawn after talks broke down.
According to figures provided by the union and company, the average pay for Boeing machinists has risen about 15% over the past decade to $75,000. The cost of living in the US has risen 33% in the same period, according to government inflation data.
Analysts at Anderson Economic Group estimated that the first month of Boeing's 33,000-worker strike cost the company and workers $5 billion. The last strike, in 2008, shuttered plants for eight weeks and hit revenue by an estimated $100 million per day.
Boeing did not immediately respond to a request for comment, sent outside standard business hours.
MAX ZAHN, JACK MOORE and AYESHA ALI
Wed, October 23, 2024 at 10:07 PM MDT·4 min read
33
Boeing machinists on Wednesday rejected a new contract proposal that would've ended a weekslong work stoppage against the embattled aerospace company -- and the union said the strike will go on.
Sixty-four percent of workers voted to reject the new contract, according to the International Association of Machinists and Aerospace Workers (IAM), the union representing 33,000 Boeing workers in Washington, Oregon and California.
Representatives for Boeing said Wednesday night the company did not have a comment on the vote.
The proposed contract would have delivered a 35% raise over the four-year duration of the contract, upping the 25% cumulative raise provided in a previous offer overwhelmingly rejected by workers in a vote last month. Workers had initially sought a 40% cumulative pay increase.
The proposal also called for hiking Boeing's contribution to a 401(k) plan, but it declined to fulfill workers' call for a reinstatement of the company's defined pension. The contract would have included a $7,000 ratification bonus for each worker, as well as a performance bonus that Boeing had sought to jettison.
But union leaders said the concessions offered in the proposal were not enough to meet the demands of rank-and-file union members.
"This contract struggle began over ten years ago when the company overreached and created a wound that may never heal for many members," said Jon Holden, president of IAM District 751 in Seattle, in a statement after the vote. "I don’t have to tell you all how challenging it has been for our membership through the pandemic, the crashes, massive inflation, and the need to address the losses stemming from the 2014 contract."
The union said the strike will continue as they return to the bargaining table with the company.
Hours before workers cast ballots on Wednesday, Boeing released an earnings report showing the company had lost a staggering $6.1 billion over the most recent quarter due primarily to costs associated with the strike.
MORE: Striking Boeing workers set to vote on new contract offer. Will they approve it?
"We have some really big rocks that we need to get behind us to move the company forward," Boeing CEO Kelly Ortberg said in a letter to investors on Wednesday.
Ortberg singled out the strike as an issue that must be addressed "first and foremost."
"We have been feverishly working to find a solution that works for the company and meets our employees' needs," Ortberg said.
The company and its workers have faced significant financial losses during the nearly six-week strike.
Union members have received $250 per week from a strike fund, beginning in the third week of the work stoppage. That compensation marks a major pay cut for many of the employees.
Mid-ranking workers involved in the strike typically make $20 per hour, which totals $800 per 40-hour work week, while higher-paid members earn salaries upward of $100,000 per year, or nearly $2,000 per week.
"The question is whether the employees and their union determine that they have the power to get more from Boeing," Henry Harteveldt, a travel industry analyst at Atmosphere Research Group, told ABC News. "It's whether they think they can extract more from Boeing, or Boeing says, 'You know what, this is it.'"
PHOTO: Boeing factory workers and supporters gather on a picket line during the third day of a strike near the entrance to a Boeing production facility in Renton, Wash., Sept. 15, 2024. (David Ryder/Reuters)
The strike was set to cost Boeing $108 million per day in lost revenue, amounting to as much as $5.5 billion in losses should the work stoppage last 50 days, investment bank TD Cowen said in a report reviewed by ABC News at the outset of the dispute. So far, the strike has lasted 40 days.
In September, Boeing announced furloughs and pay cuts for some white-collar employees in response to the strike. Last week, Boeing CEO Kelly Ortberg announced plans to cut 17,000 jobs, which amounts to about 10% of its global workforce.
"This is really painful for Boeing," Richard Aboulafia, managing director of aerospace consulting firm AeroDynamic Advisory, told ABC News.
MORE: What would a Kamala Harris or Donald Trump victory mean for the stock market?
The most recent IAM strike against Boeing in the Pacific Northwest, in 2008, lasted 57 days. Work stoppages undertaken by unionized Boeing employees in the same region have historically lasted an average of 60 days, a Bank of America Global Research analysis found after examining seven previous strikes, the earliest in 1948.
In the days leading up to Wednesday's vote, the outcome remained unclear, Jake Rosenfeld, a professor of sociology at Washington University in St. Louis, who studies labor, told ABC News.
"What are the workers going to do?" Rosenfeld said. "That's a really tough question."
Boeing workers vote to reject deal
to end strike, union says
Michael Sainato
THE GUARDIAN
Wed, October 23, 2024
Boeing workers strike in Seattle, Washington, on 15 October 2024. Members of the International Association of Machinists and Aerospace Workers union have voted to extend their month-long strike.Photograph: David Ryder/Reuters
Boeing workers have rejected the latest offer to end the more than a month-long strike that has crippled the already struggling manufacturing giant.
In a blow to Boeing and the Biden administration, which has fought for a resolution to the dispute, 64% of the 33,000 members of the International Association of Machinists and Aerospace Workers union voted to reject the contract, the union said late on Wednesday.
“After 10 years of sacrifices, we still have ground to make up, and we’re hopeful to do so by resuming negotiations promptly,” leaders of the union said in a statement after votes were tallied.
The news came on the same day that new CEO Kelly Ortberg said he would “fundamentally” transform the culture inside the beleaguered aerospace giant, and announced Boeing’s quarterly losses had swelled to almost $6bn.
The workers represented by the union began striking on 13 September.
The latest contract proposal included a 35% wage increase over the four-year contract, reinstatement of incentive bonuses, increases to the company 401k match – though workers were pushing to bring back pensions that were lost as concessionary in previous contracts, and a $7,000 ratification bonus.
Related: Boeing faces new scrutiny as US aviation agency opens safety review
After weeks of tense negotiations, a deal had appeared to be in the offing over the weekend.
“With the help of acting US secretary of labor Julie Su, we have received a negotiated proposal and resolution to end the strike, and it warrants presenting to the members and is worthy of your consideration,” the union’s bargaining committee said in a statement to members on 19 October. “We are finalizing the strike settlement agreement, which will be completed soon, along with additional contract details to provide you with a clear understanding of the offer.”
Workers also rejected an initial tentative agreement in early September. Talks resumed with a federal mediator on 7 October after a two-week stalemate. But those talks quickly broke down as Boeing suspended negotiations with the union and withdrew the offer that included a 30% wage increase.
On 1 October, employee healthcare benefits for Boeing workers on strike were cut off by the company. The union noted workers had been engaging with the community for striking members to work temporary jobs in addition to the strike pay of $250 a week members have been receiving since the third week of the strike.
Boeing had also announced plans to layoff 17,000 workers as part of plans for a 10% work reduction at its commercial unit for union and non-union workers.
According to a recent analysis by the Anderson Economic Group, the strike cost an estimated $7.6bn in direct economic losses, including $4.35bn for Boeing and nearly $2bn for Boeing suppliers
Boeing employees on strike arrive to vote on a new contract offer from the company Wednesday, Oct. 23, 2024, at the Aerospace Machinists Union hall in Renton, Wash. (AP Photo/Lindsey Wasson)
