On Friday, over 33,000 Boeing machinists in the Pacific Northwest took to picket lines instead of their factory floors after rejecting a contract offer that would have raised wages by 25% over four years. The strike has halted production of the company’s top-selling jetliners and poses a significant challenge to the company, which is already grappling with financial losses and reputational damage.
Although the strike won’t immediately affect airline flights, it is expected to significantly disrupt Boeing’s operations. Boeing, struggling with over $25 billion in losses over the past six years, now faces the added pressure of negotiating a new contract with its unionized workforce. The company is trying to conserve cash, and its leadership is working to bring the union back to the table.
The Federal Mediation and Conciliation Service (FMCS) has intervened, with the agency noting, “FMCS has been in contact with both IAM and Boeing to support their return to the negotiation table and commends the parties on their willingness to meet and work towards a mutually acceptable resolution.”
On Friday, Boeing’s stock took a hit, falling 3.7%, further contributing to its nearly 40% decline for the year.
The strike follows a vote by the International Association of Machinists and Aerospace Workers (IAM), where 94.6% of members rejected the company’s offer, and 96% voted in favor of the strike. Union members voiced their concerns about wage increases that didn’t reflect the rising cost of living in the region. “Have you seen the damn housing prices?” read some of the signs held by workers picketing outside Boeing’s Renton, Washington factory. Cars honked in support, while workers listened to songs like Twisted Sister’s *We’re Not Gonna Take It* and Taylor Swift’s *Look What You Made Me Do*.
One worker, John Olson, expressed frustration with the wage offer. “The last contract we negotiated was 16 years ago, and the company is basing the wage increases off of wages from 16 years ago,” Olson said. He also pointed out that his pay had only risen by 2% over his six years at Boeing, which he deemed inadequate in light of inflation.
Other workers echoed similar sentiments, with some dissatisfied over changes Boeing made to the calculation of annual bonuses. While the proposed contract included $3,000 lump-sum payments, reduced healthcare costs, and pay raises that would increase the average annual salary from $75,608 to $106,350 over four years, it still fell short of union demands.
The union initially sought a 40% wage increase over three years, as well as the reinstatement of traditional pensions that were cut a decade ago. While Boeing did agree to higher 401(k) contributions of up to $4,160 per worker and promised to build its next aircraft in Washington state, the offer failed to satisfy the machinists.
Union president Jon Holden, representing IAM District 751, announced that the union would survey its members to determine key concerns for future negotiations. Holden emphasized that the message was clear: the tentative agreement, endorsed by union leadership, did not meet workers’ expectations. Boeing, for its part, expressed readiness to return to the negotiating table, stating, “We remain committed to resetting our relationship with our employees and the union.”
Boeing Chief Financial Officer Brian West acknowledged the company’s disappointment at seeing a deal reached with union leadership fall through when put to a vote by the rank-and-file. West spoke at an investor conference in California on Friday, where he noted that Boeing, which carries about $60 billion in debt, would focus on conserving cash during the strike. He also refrained from speculating on the strike’s financial toll, explaining that its impact would depend on the strike’s duration.
The newly appointed CEO, Kelly Ortberg, who has only been in his role for six weeks, has been tasked with rebuilding trust between the company and its workers. Prior to the strike, Ortberg made a last-minute appeal to the machinists, urging them not to strike. “No one wins in a walkout,” Ortberg said, stressing that a strike would harm Boeing’s efforts to recover and further erode trust with its airline customers. He added, “Working together, I know that we can get back on track, but a strike would put our shared recovery in jeopardy, further eroding trust with our customers and hurting our ability to determine our future together.”
Despite Ortberg’s appeal, the machinists decided to strike. Union leader Holden said workers felt disrespected by years of stagnant wages and the pension cuts they had accepted since 2008 in order to keep jobs from being moved out of Washington. Holden summed up the workers’ frustration, stating, “This is about respect, this is about the past, and this is about fighting for our future.”
The machinists who are on strike are responsible for assembling Boeing’s 737 Max, its best-selling airliner, along with the 777 and 767 cargo planes. While the strike has brought production of these aircraft to a halt, the assembly of Boeing’s 787 Dreamliners, which takes place at a non-union facility in South Carolina, remains unaffected.
The strike is the latest in a series of setbacks for Boeing in 2024. From incidents like a panel blowing off one of its passenger jets to challenges faced by its spacecraft program, the company has been dealing with numerous crises. The walkout adds to the growing list of challenges facing Ortberg as he tries to steer the company back to stability. The previous Boeing strike in 2008 lasted eight weeks, costing the company about $100 million per day in deferred revenue. A strike in 1995 lasted 10 weeks. Aerospace analyst Sheila Kahyaoglu estimated the current strike could cost Boeing around $3 billion, considering inflation and production rates.
Striking workers, like A.J. Jones, a quality inspector with a decade at Boeing, expressed their commitment to holding out for a better deal. “I’m not sure how long this strike is going to take, but however long it takes, we will be here until we get a better deal,” Jones said.
With the strike underway and no immediate resolution in sight, Boeing faces a daunting challenge. It remains to be seen how long production will be halted and what concessions the company will need to make to satisfy its workforce. The stakes are high for both the company and the union, as both sides work towards a new contract amid rising pressure from customers and shareholders.