Boeing faced a setback as its machinists voted against a new labor deal that offered a 35% wage increase over four years. This rejection led to an extension of the strike that has been ongoing for over five weeks, disrupting the company’s aircraft production based in the Seattle area.
The contract’s rejection by a significant majority of 64% of voters dealt another blow to Boeing, especially after reporting a $6 billion quarterly loss, the largest since 2020. The strike, costing the company approximately $1 billion per month, is a serious financial burden, according to S&P Global Ratings.
The newly appointed CEO, Kelly Ortberg, had emphasized the importance of reaching a deal with the machinists to steer the company in the right direction after facing years of safety and quality issues. Ortberg outlined his vision for Boeing’s future, hinting at possible restructuring efforts to focus on core businesses. As part of this initiative, Boeing announced plans to reduce its global workforce by 10%.
The strike, involving more than 32,000 machinists in various locations, began on September 13 following the rejection of a previous tentative agreement offering a 25% raise. The latest proposal, which included a 35% wage increase over four years, 401(k) contribution enhancements, a $7,000 bonus, and other benefits, failed to meet the workers’ demands for a 40% wage increase initially sought by the union.
One of the key issues for the workers was the loss of their pension plan in a previous contract signed in 2014, which was not addressed in the latest proposal. Despite some gains made in the new agreement, the union president, Jon Holden, expressed that it did not meet all the members’ demands and indicated a willingness to return to the negotiating table.
Boeing agreed to construct its next aircraft in the Pacific Northwest as part of the new contract, addressing a concern raised by unionized workers after the relocation of 787 Dreamliner production to a non-union facility in South Carolina.
The ongoing labor dispute adds to Boeing’s challenges, including incidents such as a door plug blowing out midair from a Boeing 737 Max 9 earlier in the year, leading to increased regulatory scrutiny. The strike also disrupts the aerospace supply chain, with companies like Spirit AeroSystems announcing temporary furloughs and potential layoffs if the strike persists.
The strike’s continuation poses a significant challenge for Boeing and its suppliers, highlighting the importance of resolving the labor dispute promptly to resume normal operations and mitigate financial losses. Both parties will need to find common ground to reach a mutually beneficial agreement that addresses the concerns of the workers while ensuring the company’s sustainability and competitiveness in the aerospace industry.
