Boeing’s most recent contract offer for striking machinists came closest to the union’s demand for higher wages, yet 64% of the union voted to reject that offer in a vote on Wednesday.
The offer included a 35% pay raise (machinists have been asking for a 40% raise), a $7,000 dollar ratification bonus, and increased 401K contributions. The move leaves some wondering what could be done that will gain machinists’ approval.
One answer is pensions, according to aviation analyst Richard Aboulafia with Aerodynamics Advisory. He said the two parties must reach a deal quickly for the sake of “future competitiveness and the company’s health.”
“There needs to be a very high, very frequent level of engagement between Boeing management and union leaders to determine what it will take,” Aboulafia told KUOW’s Morning Edition. “And if it takes a pension, then it becomes perhaps a waiting game, an even longer strike, because that’s really difficult for Boeing to accept … there’s a real chance that it is exactly that [which the union is] holding out for.”
The International Association of Machinists and Aerospace Workers (IAM) District 751 represents nearly 33,000 striking machinists, mostly in Washington state. Throughout recent negotiations, the union has demanded that Boeing restore a pension program for employees. The company has said the pension issue is a non-starter, having nixed its pension offering 10 years ago during a previous labor contract negotiation. It’s one reason the union may still be leaning toward the picket line.
“It was an incredibly contentious period of labor management relations, and no question, Boeing management was incredibly arrogant about it,” Aboulafia said. “So there are just enough workers left with the memory of that horrible experience to, understandably, have a level of anger … some of it might just be a desire to say, ‘Hey, you can’t treat us like that, and we want better terms and conditions.’”
IAM President John Holden said if a pension is not in the cards, the union is willing to consider other options that provide a defined benefit. It’s a positive message and means there is another opportunity to negotiate, according to Aboulafia. But it needs to happen fast.“It’s for the sake of the industry, for the supply chain, for Boeing itself, Boeing’s customers, and for everybody involved,” Aboulafia said.
The strike is about to enter its seventh week. The longest Boeing’s strike was in 1948 and lasted 140 days. Boeing did not comment on 64% of union members voting against the latest contract offer, and the two parties have yet to announce a new negotiation date.
Boeing woes beyond the strike
The strike is just one challenge that Boeing faces. Aboulafia said the company has “muscled up … for a long siege.”“They’ve announced plans to bring on additional equity to the tune of up to $25 billion and another $10 billion in debt, possibly. So they’re determined to make a go of this. That, of course, would be incredibly painful for everybody involved. Meanwhile, they’re losing billions of dollars and they’ve announced that even if the strike is settled soon, they’ll probably keep burning cash into next year.”
Boeing announced this week that it suffered $6 billion in losses in the third quarter of this year, citing the strike in its report on these losses. All this as the company’s stock inches closer to “junk” status.
Incoming Boeing CEO Kelly Ortberg wants to end the strike. Beyond that, he said he aims to repair relationships across workers, management, and executives. Part of that effort is bringing executives back to the plants. Boeing’s headquarters were moved away from the Seattle area in 2001 and previous CEOs have rejected any notion of coming back.
“We need to be on the factory floors,” Ortberg said Wednesday, during a company earnings call. “We need to know what’s going on, not only with our products, but with our people. And most importantly, we need to prevent the festering of issues and work better together to identify, fix, and understand the root cause.”
While Ortberg has said the people who allowed Boeing’s “dysfunctional culture” have already left the company, Aboulafia argues that’s not entirely accurate.
“I think there needs to be a lot more people brought in who are used to being on the shop floor,” he said. “A lot of people with a background in either program management, engineering, or manufacturing … new people, because a lot of those folks have left … there are certainly some good people left at Boeing, but there are a lot of ones who put up with a completely dysfunctional culture, and quite bluntly, they should be replaced.”
“The board alone is kind of evidence that they put up with a disastrous situation for far too long,” Aboulafia added.
This story comes to you from the Northwest News Network, a collaboration between public media organizations in Oregon and Washington.