Striking Boeing machinists consider deal that includes 35% pay hike

Factory workers for Boeing may have reached an agreement with the airline after going on strike for the first time in 16 years. Photo / M. Scott Brauer / Bloomberg via Getty Images

The union representing 33,000 striking machinists has announced it has reached a tentative deal with Boeing that would boost pay, improve benefits and potentially end a weeks-long walkout that halted production of some of the company’s top-selling jets and led to furloughs and layoff announcements involving thousands of workers.

The tentative deal calls for a 35% general wage increase over four years, improvements to retirement benefits and a US$7000 signing bonus, according to the International Association of Machinists and Aerospace Workers. Those terms mark greater concessions by the company compared with its previous offer, which included a 30% pay hike.

The union said it has scheduled a vote for Wednesday. The deal would pass on a simple majority vote.

“The workers will ultimately decide if this specific proposal is sufficient in meeting their very legitimate needs and goal of achieving respect and fairness at Boeing,” Jon Holden and Brandon Bryant, presidents of the union districts representing the striking workers, said in a statement.

Boeing said it looks forward to the vote.

Acting labour secretary Julie Su helped broker the deal, the union said. “[US] 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 be for the union workers to decide,” the White House said in a statement.

Word of the tentative deal comes just over a week after talks broke off. Boeing announced on October 11 it would cut 17,000 jobs – nearly 10% of its workforce – as part of another move to shore up its shaky finances. News of the job cuts came on the same day the company said it expected to report a steep loss in the third quarter, when it recorded a US$3 billion charge in its commercial airplanes business and a US$2b charge in its defense, space and security unit. In the past five years, Boeing has lost more than US$25b.

This week, hundreds of striking machinists rallied in Seattle as Su and lawmakers pushed the union and the company to return to the bargaining table. In a letter on Tuesday to Boeing chief executive Kelly Ortberg and union leaders, congressional Democrats from Washington state, including senators Maria Cantwell and Patty Murray, as well as representatives Rick Larsen and Adam Smith, urged the two sides to “redouble your efforts to reach a mutually beneficial resolution”.

The machinists, who form the company’s largest union, walked off their jobs last month for the first time in 16 years. Some analysts estimated Boeing, already battered by regulatory and legal crises, stood to lose as much as US$1b a week from the walkout, though others later calculated the loss at just over US$1b a month, after the company instituted cost-cutting measures. The strike also has put the company’s credit rating at risk.

Machinists went on strike on September 13 after resoundingly rejecting the first offer from the company, whose proposed 25% pay hike fell far short of the 40% increase many union members sought.

The two sides resumed negotiations with the help of federal mediators within days after the walkout began, fuelling optimism a settlement could be reached quickly. But talks broke off after two days, with the union expressing frustration that the company was unprepared and not taking its demands seriously.

Negotiators met several more times, with Boeing last month offering a 30% increase, the restoration of an annual bonus programme, and a US$6000 signing bonus. But the two sides broke off talks earlier this month and accused each other of failing to bargain in good faith.

The last strike by IAM members, in 2008, lasted 54 days.

Ortberg, who took over as chief executive in August, said he was committed to resetting the relationship between the union and management, but it’s not clear whether the current deal – even if it is approved – will smooth over years of worker frustration with the company’s negotiating tactics, such as threats to move airliner production out of the region unless machinists agreed to concessions including the loss of their pensions.

Even before the strike, Boeing was struggling to recover from setbacks that began in January when a portion of a 737 Max jet operated by Alaska Airlines blew out mid-flight, leaving a gaping hole in the side of the plane. The accident spawned multiple federal investigations and led the Federal Aviation Administration to cap the number of 737 Max jets the struggling aerospace giant could build.