Boeing is in a really rough spot at the moment on several levels. Perhaps the most immediate challenge is that the company’s machinists have been on strike since September 13, 2024.
They deserve pay increases, as they’re overdue for a new contract. The issue is, management and the union haven’t been able to agree on how rich a new contract should be. Before the machinists went on strike, the company offered a 25% pay increase, which wasn’t enough, and caused members to vote to go on strike.
Early on in the strike, Boeing presented workers with what it called its “best and final” offer, with pay raises of 30% over four years, plus some other improvements. That was also rejected. As it turns out, that wasn’t the best and final offer.
Then after several more weeks, Boeing once again increased its offer, with pay raises of 35% over four years, and other improvements. That was also rejected, but by a narrower margin. Since then, contract negotiations have continued, and there’s some good news.
In this post:
Boeing machinists urged to take contract offer
In recent days, we’ve seen negotiations between Boeing and the union make progress, with a new contract proposal for machinists:
- They’re now being offered a 38% pay increase, rather than a 35% pay increase; this comes in the form of a 13% increase the first year, a 9% increase the second year, a 9% increase the third year, and a 7% increase the fourth year, which compounds to 43.65% over the life of the agreement
- They’re now being offered a $7,000 ratification bonus plus a $5,000 lump sum payment that they can accept right away, if they’d like; previously, there was a $7,000 ratification bonus plus $5,000 added to their 401k
This time around, IAM Union District 751 is highly recommending that members vote in favor of the contract:
Your Union is endorsing and recommending the latest IAM/Boeing Contract Proposal. It is time for our Members to lock in these gains and confidently declare victory. We believe asking members to stay on strike longer wouldn’t be right as we have achieved so much success.
In every negotiation and strike, there is a point where we have extracted everything that we can in bargaining and by withholding our labor. We are at that point now and risk a regressive or lesser offer in the future.
This contract builds on everything achieved in the September 12, 2024 agreement, with the additional gains you achieved by going on strike.
The two significant changes in this offer from the last one are:
-38% GWI over four years – 13%, 9%, 9%, 7%, which compounds to 43.65% over the life of the agreement
-The $12,000 Ratification bonus combines the previous $7k ratification bonus and the $5K lump sum into the 401k. Now, members can choose how this total amount is received – in your paycheck, contribution to your 401K, or a combination of both.
While members of course don’t always vote in favor of contracts recommended by the union, the union is being pretty clear that it can’t do better, warning that future offers may get worse, and that the union has extracted all of the value that it can.
Members will be voting on this new proposal on Monday, November 4, 2024, and we could see machinists return to work shortly thereafter.
The last contract proposal was rejected, with 64% of members voting against the deal. I certainly could be wrong, but I get the sense that this new contract proposal should be approved. With past proposals, the union didn’t threaten that future offers could be worse, or that it had exercised all possible options.
The machinists who are striking are the ones assembling the Boeing 737 MAX and the Boeing 777X, so this has impacts on Boeing’s customers. Meanwhile the Boeing 787 is assembled by different workers. Boeing estimates that it’s losing one billion dollars per month from the strike.
Boeing machinists last went on strike in 2008, and that lasted for around eight weeks, costing the company around $2 billion.
Let’s hope Boeing has hit rock bottom
I don’t want to get ahead of myself here, but I’m really hoping that this contract gets approved, so that Boeing can get back to fixing all of its other issues. While the current strike is the most immediate issue, it’s just the tip of the iceberg when it comes to Boeing’s problems.
Boeing has had an absolutely awful several years, from the Boeing 737 MAX being grounded, to the Boeing 777X delivery delays, to all the production quality issues. As a company, Boeing has never been in a more challenging position, in terms of reputation, financials, etc.
So suffice it to say that this is tricky for Boeing. It’s the worst possible time for the company to be on the hook for huge pay increases, especially when the aircraft manufacturer has already given such big discounts to customers to sell planes.
At the same time, for how long are employees supposed to be patient while management figures out its mess? Ultimately Boeing is in the situation it’s in because it was for years run by people obsessed with the short term stock price, rather than being obsessed with producing quality aircraft. This is an issue that starts from the top down.
Kelly Ortberg was only recently appointed as Boeing’s new CEO. By most accounts, he seemed like a great candidate for the job. As you can tell, unfortunately his tenure isn’t off to a great start, though. I understand he needs to look out for the company’s bottom line, though I’ve also gotta say, starting your tenure with the biggest strike at the company in over 15 years isn’t exactly ideal. I also think Boeing really messed up with its “best and final offer” approach to negotiations, when that wasn’t in fact the best and final offer.
Bottom line
Boeing’s machinists have been on strike for several weeks. We’ve seen machinists reject three separate contract proposals, with the most recent being rejected by 64% of members. The union has now endorsed a new contract, which members will vote on this coming Monday.
The union is pretty clear that this is the best offer that it can get, and that it fears that future offers could be worse. So I suspect members will vote in favor of this. Let’s hope that’s the case, as many airlines are relying on the delivery of new Boeing jets, and this strike is preventing that. Once the strike is over, Boeing can get back to all of its other problems…
What do you make of the Boeing strike situation?
I have no idea what machinists make at Airbus. It would be very helpful to be able to compare whether this contract is at all reasonable given that Boeing still HAS TO SELL AIRPLANES at a competitive price.
The ability to use legal blackmail to force Boeing to the brink of bankruptcy is a god given right for some but when (maybe if) Boeing goes down because of this there will be a lot of...
I have no idea what machinists make at Airbus. It would be very helpful to be able to compare whether this contract is at all reasonable given that Boeing still HAS TO SELL AIRPLANES at a competitive price.
The ability to use legal blackmail to force Boeing to the brink of bankruptcy is a god given right for some but when (maybe if) Boeing goes down because of this there will be a lot of loss and hand wringing.
Good luck Boeing - you are going to need it especially if the Max 10 and 777X are delayed any more by vindictive bureaucrats.
so the vindictive bureaucrats made the door blow out of the 777X or caused the engine link to break?
was it the vindictive bureaucrats that decided one sensor was enough on the MAX and then didn't tell pilots MCAS even existed so they had no idea what they were fighting against?
no, Boeing has made a number of very significant mistakes and they have been costly.
Having to negotiate with a workforce that has...
so the vindictive bureaucrats made the door blow out of the 777X or caused the engine link to break?
was it the vindictive bureaucrats that decided one sensor was enough on the MAX and then didn't tell pilots MCAS even existed so they had no idea what they were fighting against?
no, Boeing has made a number of very significant mistakes and they have been costly.
Having to negotiate with a workforce that has seen their cost of living soar far higher than the national average is not one of those mistakes.
Boeing simply has to figure out how to manage their revenue so that they cover the higher costs that are inevitably coming.
It’s good to see this resolved. Boeing can finally get back to business
I agree with you what you said whether the strike will end, as a
result of enhanced offer of rise in emoluments. it is similar to the
cease fire agreement between Israel on one hand and hamas/hezbullah/Iran and Lebanon on the other hand. both are
unpredictable and dont know when and how it is going to materialize.
boeing management could have "rounded off" to 40% which may look very attractive to both...
I agree with you what you said whether the strike will end, as a
result of enhanced offer of rise in emoluments. it is similar to the
cease fire agreement between Israel on one hand and hamas/hezbullah/Iran and Lebanon on the other hand. both are
unpredictable and dont know when and how it is going to materialize.
boeing management could have "rounded off" to 40% which may look very attractive to both union members as well as public
plus other special bonus payments. i wish they accept this final offer without any further delay, as all airlines globally are waiting
for delivery of ordered planes for their route expension.
if mr Ratan Tata of Air india is in this place he woud have happily
agreed for 40 per cent and make them happy so that there will be optimum level of production and productivity
It's so un-American to strike.
People should just be grateful that they are making things to serve the people work harder and can afford a better lifestyle.
I hate the fact that likes of Trump have to grovel to the poor and promise all these "no tax on tips" crap, you're poor for a reason and maybe if you don't want to be, you should try and re-roll the dice and get born rich like Trump.
They are smart to strike. The machinists have a skill set that is in demand and is forcing the employer to increase compensation.
This strike should teach Boeing that it is highly vulnerable to strikes. The labor force cannot be easily replaced.
Possibly building the 797 in South Carolina is one step. The cost of living is higher in the Seattle area so workers would want higher pay.
One finds the subject article and posts from TD & B, most interesting and I look forward to reading more.
My interest is purely as a passenger who finds the prospect of flying on any commercial Boeing aircraft to be untenable at present.
It wasn’t always like that, I have many thousands of hours logged on Boeing military machines.
keep in mind this is all playing out just days before the election and to the US' largest manufacturing exporter.
The US GDP is being affected by this strike.
There is a very high likelihood that the IAM and Boeing are being "strongly encouraged" to settle this strike.... the feds were involved in previous talks.
The IAM wants a defined pension back - but that ship has sailed and no amount of money...
keep in mind this is all playing out just days before the election and to the US' largest manufacturing exporter.
The US GDP is being affected by this strike.
There is a very high likelihood that the IAM and Boeing are being "strongly encouraged" to settle this strike.... the feds were involved in previous talks.
The IAM wants a defined pension back - but that ship has sailed and no amount of money is going to force private companies to take on a financial risk for DB pensions again. A very low percentage of US workers have DB pensions - with a large portion of those government workers.
Boeing's very future is on the line as the strike keeps going.
the cost of living in the Pacific Northwest has soared because of the growth of tech companies and the overall relocation of people from California to the PNW. there is a cost of living problem in the Seattle area.
At the same time, Airbus is not seeing labor cost increases of this magnitude and neither are the Chinese who are rolling out new jets which could be appealing to price sensitive customers in some parts of the world. Embraer and other manufacturers are poised to build a new generation narrowbody aircraft.
Boeing can be turned around but getting the workforce back on the job is the most important thing right now.
The future of Boeing and a number of airlines is very much on the line
I agree with you a 100% on everything you said.
Boeing has not reached rock bottom. They haven’t learned any lessons. We said that they had reached rock bottom during the max groundings. They hadn’t. We said they had reached rock bottom during the 787 quality control issues. They hadn’t. We said they’d reached rock bottom after the Alaska door incident. They hadn’t. Boeing has rotted at the core, and tinkering on the edges will not change that.