Members of Boeing Co.’s largest union vote on the first comprehensive labor contract in 16 years on Thursday, setting the stage for a disruptive strike just as the embattled planemaker works to recover from a series of manufacturing missteps.
Company and union leaders presented their tentative agreement over the weekend, calling it a landmark accord that includes 25% guaranteed wage increase, the largest such offer in Boeing’s history. But the terms swiftly enraged workers expecting a far greater payout, demanding payback after their wages were curtailed by soaring inflation in recent years.
Holden has said he understands the angry response from members still seething over a 2014 accord that hiked health care costs and stripped away pensions. Boeing management, meanwhile, has sought to quell the rage, saying they bargained in good faith and that the company had put its best foot forward.
“I ask you not to sacrifice the opportunity to secure our future together, because of the frustrations of the past,” Boeing Chief Executive Officer Kelly Ortberg said in a memo to workers on Wednesday. He said employees considering another path is “one where no one wins.”
Boeing is keen to avert a drawn-out strike, given the company is bleeding cash following a near-catastrophic accident in January that forced it to slow down production. The planemaker is gradually increasing output again, although the build rate on the all-important 737 Max model has been capped by the Federal Aviation Administration until the company can reliably put its factories back on track.
FAA Administrator Mike Whitaker said in an interview in Washington on Tuesday that “we would certainly be monitoring the risk that was being introduced in the system” if a strike occurred. Boeing has struggled to rein in so-called traveled work, industry parlance for work performed out of sequence, and a strike would risk reversing recent gains.
The Seattle-area union chapter has a history of activism dating back to the late 1940s, and the last time there were full-fledged contract talks in 2008, its members went on strike for two months. That strike cost the company $2.5 billion in operating free cash flow, estimates Sheila Kahyaoglu, an analyst at Jefferies, or more than $3 billion at today’s rate.
“Boeing’s obviously in a much weaker spot for a variety of reasons,” said Leon Grunberg, professor emeritus of sociology at the University of Puget Sound. “They definitely do not need a strike right now.”
A vocal faction of IAM members are in no mood for compromise after years of strong-arm tactics by Boeing management. They’re still angry over a 2014 extension that wrested pensions from workers and silenced activists for a decade in exchange for a pledge to build the 777X long-range jet in Everett.
A flyer circulating widely around Boeing properties in Seattle this week demanded wage increases closer to the 40% originally sought by union leaders, alongside pensions and an annual bonus to replace a similar perk that’s been eliminated by the agreement.
Union members will each cast two paper ballots: whether to accept Boeing’s contract offer, and whether to strike. The votes will be tabulated after union-hall polls close at 6 pm local time, and Holden will announce the result at a press conference later in the evening.
If a majority of workers reject the tentative agreement, and two-thirds support a strike, then Boeing’s factory force will go on strike a stroke after midnight. If fewer than two-thirds support the work stoppage, then the company offer automatically becomes the next contract.
In a plea to the union members, which makes up 20% of Boeing’s total workforce, Pope said the company broke with its previous tradition of withholding better terms in the expectation that workers would strike and force an additional round of contract talks.
“We bargained in absolute good faith with the IAM team that represents you and your interests,” Stephanie Pope, who runs Boeing’s commercial aircraft operations, said in a separate memo to workers on Tuesday. “Let me be clear: We did not hold back with an eye on a second vote.”
