By Peter Eavis / © 2024 The New York Times Company
When thousands of Boeing employees rejected a new labor contract, precipitating a strike that began Friday, they were at odds not just with management but also with the leaders of their union, who backed the proposed deal.
Now, any attempt to reach an agreement must take account of the demands of the rank and file of the International Association of Machinists and Aerospace Workers. What they want — significantly larger pay raises and far more lucrative retirement benefits than their leaders and Boeing agreed to — may be too much for management. But labor experts said the strength of the strike vote — 96% in favor — should help the union get a better deal.
“Those overwhelming numbers are kind of embarrassing, certainly from a public relations standpoint for the union,” said Jake Rosenfeld, a sociologist who studies labor at Washington University in St. Louis. “But they also simultaneously present the union with leverage when it does resume negotiations.”
And Boeing is in a difficult spot after a slowdown in commercial jet production — required by regulators after a panel blew out of a passenger jet fuselage in January — led to big financial losses. A long strike at Boeing’s main production base in the Seattle area would add significantly to the losses and possibly tip its credit rating into junk territory, a chilling development for a company with nearly $60 billion in debt.
The federal mediation service said Friday that the union and Boeing management would resume talks in the coming days.
“We’re going to go back to the bargaining table and bargain for what our members deserve,” Jon Holden, president of District 751, the part of the machinists union that represents most of the workers on strike, said in an interview. “We’ll push this company farther than they ever thought they’d go.”
Asked whether union leadership had been out of step with the rank and file, Holden said the vote on the deal enabled members’ views to be heard. “You must never forget that the real power is within your membership,” he said.
Brian West, Boeing’s chief financial officer, speaking at an investor conference Friday, said the strike would “jeopardize our recovery,” but he also said management was willing to talk to try to get a deal done. “We want to get back to the table and we want to reach an agreement that’s good for our people, their families, our community,” he said.
Asked to comment for this article, Boeing referred to West’s remarks.
Reaching a deal will not be easy. Wages are a primary reason.
Mid-ranking workers represented by the machinists union currently earn a minimum of $20 an hour, which is in line with Amazon delivery drivers, who do not belong to unions. And though that $20 an hour is 25% higher than the $16 at the start of the contract, in 2008, inflation has been 44% since then.
“The cost of living in the Seattle area is very, very high,” said Andrew Hedden, associate director of the Harry Bridges Center for Labor Studies at the University of Washington. “There’s been all these pressures that the company hasn’t kept up with.”
Boeing says it offered to raise wages by 25% on average for all jobs covered by the contract, with larger increases going to lower-paid workers. Employees who have been at the company for six years or longer earn significantly more than those making the minimum rate. The 5,000 mechanics who do the final check of airplane components and systems were offered annual wages of $130,000 in the deal at the end of the four-year contract, up from $102,000, Boeing said.
And the company offered to let workers carry over the higher wage rate when they switch jobs within the company. The machinists union said the current arrangement discouraged workers from seeking other types of work at Boeing to develop their careers.
Despite such offers, the rank and file wanted more, a 40% wage increase in particular. “We are firm on that,” said Phet Bouapha, a mechanic who has been at Boeing for nine years and is a union shop steward.
Retirement pay is also a key issue. A decade ago, Boeing stopped offering a type of pension that pays out a predictable sum in retirement. “That’s a wound that may never heal,” Holden said.
Union members want the pension to return in a new contract and said the additional 401(k) contributions offered by management were not enough. “It’s important for people to have long-term security,” Bouapha said.
The last strike at Boeing, in 2008, lasted nearly two months, a long time for striking workers to be without a paycheck. Strike pay from the union is just $250 a week, beginning in the third week. Ruben Tishchuk, a mechanic who has been at Boeing for six years, said he had sufficient savings to get through at least two weeks of a strike.
“My kid wants to be like his dad and make airplanes, but what will his future be like if they keep chipping away at our benefits?” Tishchuk said. “It goes beyond me — I’m fighting for my kids’ and grandkids’ futures.”
Asked whether his members could bear a long strike on little income, Holden said, “The battle of time is going to play out here.”
The strike comes at a critical time for Boeing’s finances and its reputation with customers and the public. The company had to contend with the fallout from fatal crashes, in 2018 and 2019, of its 737 Max plane. The COVID-19 pandemic, which caused a severe drop in global air travel and supply chain snarls, walloped Boeing’s business. And this year a fuselage panel blew out of a plane in flight. Its defense business is weighed down by losses on fixed-price contracts.
Boeing’s leaders had hoped that production of commercial jets would pick up, enabling it to reverse the cash drain from its operations. In the first half of this year, the company’s operations had a cash outflow of over $7 billion. A strike on its own could cause a cash outflow of over $1 billion a month, Jefferies, a Wall Street firm, said in a research note Friday.
West, the Boeing executive, said Friday that the company would be “laser-like-focused on actions to conserve cash.” Moody’s Investors Service said Friday that it was weighing whether to downgrade Boeing’s credit rating to noninvestment grade — “junk” territory.
But labor experts say Boeing is not in such dire straits financially that it cannot afford to improve its offer. For all its problems, Boeing is an effective duopoly, with the European aerospace consortium Airbus, in the making of commercial aircraft and has an order book that will bring in significant revenue. The company said in a recent securities filing that its order backlog was $516 billion at the end of June, and that it expected nearly a fourth of that to be converted into revenue next year, and over two-thirds by the end of 2028.
“They are strong in the long run and in very solid market position,” said Harry Katz, a professor at Cornell University’s School of Industrial and Labor Relations. “They are not like a garment manufacturer with a whole range of competitors.”
This article originally appeared in The New York Times.
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