Striking Machinists at Boeing to Vote on New Contract Proposal

By David Shepardson
(Reuters)

Striking machinists at Boeing (NYSE:BA) will vote Wednesday on a new contract proposal that includes a 35% pay hike over four years that could end a costly five-week-old strike, the company and union said Saturday.

Around 33,000 of Boeing's unionized West Coast workers, most in Washington state, have been on strike since Sept. 13. The work stoppage has halted production of the planemaker's best-selling 737 MAX and its 767 and 777 widebodies, putting added pressure on the company's already fragile finances.

The latest offer includes a $7,000 ratification bonus, reinstated incentive plan, and enhanced contributions to workers' 401(k) retirement plans, including a one-time $5,000 contribution plus up to 12% in employer contributions, according to the International Association of Machinists and Aerospace Workers Local 751.

Boeing said Saturday it looks "forward to our employees voting on the negotiated proposal." Still, there is no guarantee workers will approve the offer after they overwhelmingly rejected an initial proposal. "The future of this contract is in your hands," the union told workers Saturday.

Earlier in the week, the U.S. Chamber of Commerce pleaded on social media for the two sides to reach an agreement that would end the stoppage, impacting Boeing suppliers such as Spirit AeroSystems (NYSE:SPR), which announced furloughs.

Boeing on Oct. 8 withdrew its enhanced offer that included a 30% wage increase over four years after talks, attended by federal mediators, broke down. The union has been seeking a 40% hike and restoration of a defined benefit pension, which was not included in the new proposal.

Two senior union officials in Seattle expressed belief that members would vote in favor of the deal, but expected backlash from older workers demanding the reinstatement of a defined-benefit pension.

In September, nearly 95% of the West Coast workers rejected a tentative agreement offering a 25% pay rise over four years that had been endorsed by union officials, which prompted the strike.

The earlier tentative deal also offered a $3,000 signing bonus, which some Boeing workers criticized as too low, given past deals had bonuses of at least $5,000.

On Saturday, the union stated they had received a "negotiated proposal" with assistance from Acting U.S. Secretary of Labor Julie Su, urging striking workers that the proposal "is worthy of your consideration."

On Monday, Su was in Seattle for her first in-person efforts to help seal a new Boeing contract and returned on Thursday night after visiting Detroit. A spokesperson for Su confirmed discussions were ongoing with both parties, including meetings with Boeing CEO Kelly Ortberg and the union.

While some reactions on social media were favorable, the workers' voting intentions remain unclear. A White House spokesperson mentioned that President Biden believes collective bargaining is crucial for workers' outcomes and emphasized that the ultimate decision lies with union workers.

Last Friday, Boeing announced it would cut 17,000 jobs, or 10% of its global staff, undertaking $5 billion in charges amid a tumultuous year following a mid-air emergency involving a 737 MAX 9 jet. Boeing stated a plan for up to $25 billion in stock and debt offerings over the next three years, alongside a $10-billion credit agreement.

Boeing faces ongoing pressures due to a recent inquiry by the Federal Aviation Administration (FAA), opened after a door panel incident on a new 737 MAX 9 jet earlier this year. In July, Boeing pleaded guilty to a criminal fraud conspiracy charge and agreed to pay at least $243.6 million after breaching a 2021 deferred prosecution agreement.

Labor strife is expected to negatively influence October's employment report, releasing days before the Nov. 5 U.S. presidential election. Economists estimate the strike and temporary layoffs at Boeing and its suppliers have subtracted as many as 50,000 jobs from nonfarm payrolls this month. The economy added 254,000 jobs in September, with the unemployment rate decreasing to 4.1% from 4.2% in August.