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By David Shepardson
(Reuters) – Striking machinists at Boeing will vote on a new contract proposal on Wednesday, which includes a 35% pay hike over four years that could potentially end a costly strike that has been ongoing for five weeks, as announced by the company and union on Saturday.
Approximately 33,000 of Boeing’s unionized West Coast workers, most of whom are in Washington state, have been on strike since September 13. The strike has led to a halt in production of Boeing’s best-selling 737 MAX, as well as its 767 and 777 widebodies, putting additional strain on the company’s already fragile finances.
The latest offer comprises a $7,000 ratification bonus, reinstated incentive plan, and enhanced contributions to workers’ 401(k) retirement plans, including a one-time $5,000 contribution plus up to 12% in employer contributions, according to the International Association of Machinists and Aerospace Workers Local 751.
Boeing expressed its anticipation for the employees to vote on the negotiated proposal. However, there is no guarantee that the offer will be approved, as the initial proposal was overwhelmingly rejected by the workers. “The future of this contract is in your hands,” the union told workers on Saturday.
Earlier in the week, the U.S. Chamber of Commerce urged both sides to reach an agreement to end the strike, which has been causing disruptions in the industry, leading to announcements of furloughs by Boeing suppliers like Spirit AeroSystems.
On October 8, Boeing withdrew its enhanced offer, which included a 30% wage increase over four years, after talks attended by federal mediators failed. The union has been pushing for a 40% hike and the reinstatement of a defined benefit pension, which was not included in the new contract proposal.
Two senior union officials in Seattle told Reuters that they believed members would vote in favor of the deal, although they anticipated backlash from older workers who were demanding the reinstatement of a defined-benefit pension by Boeing.
In September, nearly 95% of the West Coast workers rejected a tentative agreement offering a 25% pay rise over four years, which had been endorsed by union officials, leading to the strike.
The union stated on Saturday in a social media post that, with the help of Acting U.S. Secretary of Labor Julie Su, they had received a “negotiated proposal” and urged striking workers to consider it.
On Monday, Su made her first in-person effort to assist in reaching a new Boeing contract in Seattle, returning on Thursday night to continue negotiations after a trip to Detroit.
A spokesperson for Su mentioned on Friday that the secretary was in Seattle having discussions with both parties and had met with Boeing CEO Kelly Ortberg and the union.
While some reactions on social media were positive towards the new deal on Saturday afternoon, it remains unclear how the workers will vote.
A spokesperson for the White House stated, “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.”
Last Friday, Boeing announced plans to cut 17,000 jobs, which accounts for 10% of its global staff, and to take $5 billion in charges, continuing a tumultuous year for the company following an incident involving a new Alaska Airlines 737 MAX 9 aircraft.
On Tuesday, Boeing announced plans for up to $25 billion in stock and debt offerings over the next three years, along with a $10 billion credit agreement.
Boeing has been under ongoing pressure since a door panel came off a new 737 MAX 9 jet in midair in January, prompting the Federal Aviation Administration to halt the planemaker from increasing production. The FAA has launched a new safety inquiry into Boeing.
In July, Boeing agreed to plead guilty to a criminal fraud conspiracy charge and agreed to pay at least $243.6 million after breaching a 2021 deferred prosecution agreement.
The labor unrest is expected to have a negative impact on the October employment report, which will be published shortly before the November 5 U.S. presidential election.
Economists estimate that the strike, along with rolling weekly furloughs of non-striking workers and temporary layoffs at Boeing’s suppliers, may have resulted in as many as 50,000 job losses from nonfarm payrolls this month. In September, the economy added 254,000 jobs, and the unemployment rate dropped to 4.1% from 4.2% in August.
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