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, said the International Association of Machinists and Aerospace Workers Local 751.

Boeing stated it looks "forward to our employees voting on the negotiated proposal." However, 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 site X for the two sides to reach an agreement that would end the stoppage, which is rippling through the industry, prompting Boeing suppliers like Spirit AeroSystems (NYSE:SPR) to announce furloughs.

Boeing on Oct. 8 withdrew its enhanced offer that included a 30% wage increase 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 offered in the new contract proposal.

Two senior union officials in Seattle told Reuters they believed members would vote in favor of the deal, although they expect backlash from older workers demanding the restoration 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, prompting the strike.

That first tentative deal included a $3,000 signing bonus, which some workers deemed too low compared to prior deals that had bonuses of at least $5,000.

On Saturday, the union informed striking workers via social media that with the assistance of Acting U.S. Secretary of Labor Julie Su, they had received a "negotiated proposal" and suggested it was worthy of consideration.

On Monday, Su was in Seattle for her first in-person effort to help reach a new Boeing contract and returned Thursday night to resume efforts after a trip to Detroit.

A spokesperson for Su noted that she was in Seattle having discussions with both parties and had met with Boeing CEO Kelly Ortberg and the union.

While some social media reactions on Saturday afternoon were favorable to the new deal, the outcome of the workers' vote remains unclear.

A spokesperson for the White House stated that President Joe Biden believes the collective bargaining process is the best way to achieve good outcomes for workers, and the ultimate decision on a contract will lie with the union workers.

Last Friday, Boeing announced plans to cut 17,000 jobs, or 10% of its global staff, and take $5 billion in charges, continuing a tumultuous year for the company, following a mid-air emergency with a new Alaska Airlines 737 MAX 9 airplane.

Boeing has also announced a window for up to $25 billion in stock and debt offerings over the next three years, along with a $10-billion credit agreement.

The company has faced ongoing pressure since a door panel flew off a new 737 MAX 9 jet in midair in January, prompting the Federal Aviation Administration to bar the company from increasing production. The FAA opened a new safety inquiry into Boeing on Friday.

In July, Boeing agreed to plead guilty to a criminal fraud conspiracy charge and pay at least $243.6 million following a breach of a 2021 deferred prosecution agreement.

This labor strife is expected to impact October's employment report, which will be published days before the Nov. 5 U.S. presidential election. Economists estimate that the strike and rolling weekly furloughs, along with temporary layoffs at Boeing's suppliers, subtracted as many as 50,000 jobs from nonfarm payrolls this month. The economy added 254,000 jobs in September, and the unemployment rate fell to 4.1% from 4.2% in August.