Boeing Co. and the union representing 33,000 striking employees reached a tentative contract agreement, aided by the White House, highlighting the critical need to resolve a work stoppage affecting one of the United States’ largest exporters.
The proposed agreement, developed overnight in Seattle, includes a 35% wage increase spread over four years, an annual bonus of at least 4%, and an additional $7,000 bonus contingent on the contract’s approval. IAM District 751 announced on its website that a ratification vote is scheduled for October 23.
This tentative agreement marks a potential end to a prolonged stalemate characterized by missteps and accusations from both parties. The White House deployed Acting Secretary of Labor Julie Su to Seattle to assist in the negotiation process, where she met multiple times with union representatives and Boeing’s new CEO, Kelly Ortberg, to resolve the deadlock.
The White House issued a statement emphasizing President Biden’s belief in the collective bargaining process as the optimal method for achieving beneficial results for workers, while noting that the ultimate decision on the contract rests with union members.
Resolving the strike could serve as a significant advantage for Ortberg, who joined Boeing in August with a focus on revitalizing operations. He is scheduled to address analysts and investors on October 23, coinciding with Boeing’s third-quarter financial report.
Despite the tentative deal, worker approval is not assured. An initial proposal backed by both parties was overwhelmingly rejected by employees last month. Boeing has since presented improved offers, initially proposing a 30% wage increase directly to workers, followed by the current offer that surpasses the initial one by 10 percentage points.
Boeing expressed anticipation for the upcoming employee vote on the negotiated proposal.
As the strike continues into its sixth week, pressure is intensifying for Boeing, its suppliers, and the striking workforce. The work stoppage, which began on September 13, affects the West Coast and has led to the suspension of assembly lines for Boeing’s 737 Max, 767, and 777 aircraft.
The company is proceeding with plans to reduce its workforce by 10% as an initial step towards a broader strategic realignment spearheaded by Ortberg. This has had a ripple effect on Boeing’s supply chain, with Spirit AeroSystems Holdings Inc. warning of the potential layoff of 700 workers involved in producing components for the 767 and 777 programs.
To stabilize its operations and uphold its investment-grade credit rating, Boeing has initiated steps to raise capital. The company secured a $10 billion credit facility with banks and filed a shelf registration to amass up to $25 billion over the next three years.
The strike by IAM District 751 is the first significant labor dispute at Boeing in 16 years. The hourly workforce is demanding 40% pay increases and enhanced retirement benefits, fueled by dissatisfaction over modest wage hikes over the past decade in contrast to the generous compensation received by senior executives.
The latest agreement addresses several worker grievances concerning previous proposals from the company. However, the agreement does not reinstate Boeing’s defined-benefit pension plan, which could be a contentious issue for some members. Instead, Boeing would enhance contributions to workers’ retirement savings plans by making a one-time $5,000 contribution to eligible employees’ 401(k) plans and fully matching contributions up to 8% of salaries.
