“We don’t want to strike –- but we’re ready and willing to do so to bring home the best aerospace contract our members have ever seen,” Jon Holden, president of IAM District 751 said in a statement following the vote. “There is no Boeing without us, and we have what it takes to build this company back to the level it was.”
Negotiations between Boeing and the 32,000-member union began in March to replace the current agreement, which expires Sept. 12. A strike in September would require another membership vote.
Boeing has been grappling with multiple investigations and controversies over safety and manufacturing integrity all year. In January, a 737 Max operated by Alaska Airlines suffered a midair door panel blowout, leaving a gaping hole in the fuselage as the plane was forced to land. This month, Boeing agreed to plead guilty to a charge of conspiracy to defraud the government over crashes of 737 Max jets in Indonesia in 2018 and Ethiopia in 2019 that killed 346 people. The agreement with the Justice Department followed a finding by prosecutors that Boeing failed to live up to the terms of a deal the company negotiated with the government in 2021 that would have shielded it from criminal prosecution.
Now its labor issues loom large. The union’s proposal includes a more than 40 percent pay increase and restoration of the traditional pension program that was eliminated in 2014. While pay and benefits are important, after several years in which Boeing threatened to move aircraft production elsewhere, Holden, IAM District’s 751′s president said one of the union’s top priorities is ensuring that the company’s next new airplane is built in Washington state.
Boeing has not announced plans for a new plane and declined to comment on where such a plane would be built. However, its threats to move production to another state in 2008, 2011 and 2014 enabled it to win concessions from union members eager to keep production in Washington.
This time around, however, Boeing finds itself negotiating at a time when aviation industry unions have notched significant victories.
Last summer, American Airlines pilots won a 46 percent raise, while flight attendants at Southwest Airlines recently approved a deal that gives them a more than 20 percent raise. And though IAM members at Spirit AeroSystems, a key supplier recently reacquired by Boeing last month, walked off their jobs for six days, they ultimately won a 23.5 percent pay raise over the life of the contract and other concessions including the elimination of mandatory overtime on the weekends. IAM’s leaders and members have watched those negotiations closely.
“They have eyes and ears, and they can see what’s going on in other places,” said Stewart Glickman, deputy director of equity research at CFRA, an investment research firm.
Glickman said he sees two possible paths for Boeing: It can pay up to avoid a strike, which will add to the company’s cash crunch, or it can play hardball, which risks causing a strike and further disruption to production.
Even a brief walkout by machinists would hamper Boeing’s ability to meet production targets because of the key roles they play in assembling and inspecting 737 Max and 777 aircraft. Wall Street analysts estimated that during the 2008 strike, which shut down production for two months, the company lost more than $2 billion in profits. Some suppliers were forced to lay off workers and slow down operations.
Richard Aboulafia, a managing director at the aerospace consulting firm AeroDynamic Advisory, said that given Boeing’s multiple stumbles, these negotiations could take on an outsize role.
“What’s at stake is [Boeing could] lose even more credibility in the eyes of customers, regulators, suppliers and the whole industry,” he said.
It has been 16 years since the two sides have negotiated an entirely new contract. The last agreement in 2008, came after the two-month walkout. Boeing reopened negotiations in 2011 and again in 2013. Both times the company won concessions, including increases in the amount workers pay for health care and the end of the traditional pension program in exchange for agreeing to keep airplane production in Washington state.
“We remain confident we can reach a deal that balances the needs of our employees and the business realities we face as a company,” Boeing said in a statement Wednesday. Stephanie Pope, head of Boeing’s commercial airplanes, has said the two sides have been having “very constructive meetings” since March.
“We are aligned and engaged in what we want the future of this company to look like,” Pope said in a video clip posted on the company’s website in April. “I am very encouraged for the opportunity to make that happen.”
The union has staged rallies and other actions to show the company it is serious. Ahead of Wednesday’s strike authorization vote, thousands of members packed into T-Mobile Park, home of the Seattle Mariners, for a raucous prevote rally. Signs proclaimed, “WE DESERVE MORE 2024” and “MORE $$.”
“If you want to bring an airplane to market the quickest, they should utilize the infrastructure that they have here,” Holden said. “It wasn’t created overnight. It took over 100 years to get to this point. The supply chain is here, the higher education community, technical colleges to train the next generation of workers, the engineers. You just can’t set that up overnight, and so they really do need to come here.”