Workers at Boeing’s West Coast factories in the United States approved a new contract offer Monday. This decision ended a tough seven-week strike that halted most jet production and worsened the company’s financial difficulties.
Union members voted 59% in favor of the new contract after rejecting two previous offers in recent weeks. The agreement provides a 38% salary increase over four years, easing pressure on Boeing’s new CEO, Kelly Ortberg.
“This is a victory. We can hold our heads high,” Jon Holden, the union’s lead negotiator, told members after the results were announced. “Now it’s our job to get back to work.”
Boeing has faced continuous setbacks since a door panel blew off a nearly new 737 MAX mid-air in January. The end of the first strike in 16 years by its largest union brings the company a welcome relief.
After the vote, Ortberg expressed his satisfaction that the union had approved a settlement in a statement to Boeing workers.
“While the past few months have been difficult for all of us, we are all part of the same team,” he stated. “There is much work ahead to return to the excellence that made Boeing an iconic company.”
Some 33,000 machinists have been on strike since September 13, demanding a 40% pay raise. They also seek the reinstatement of a defined-benefit pension, which was replaced by a 401(k) retirement plan a decade ago.
“I’m ready to get back to work,” stated David Lemon, a Seattle employee certified in equipment calibration who supported the deal.
He determined that the 40% rise they had sought was equal to the pay increase plus a 4% bonus, which was the minimum yearly payout promised by the reinstated incentive plan. His words, “We got there,”
Employees received an increase in employer matching contributions for their 401(k) plans, but the old pension would not be reinstated.
Additionally, Boeing pledged to construct the upcoming aircraft near Seattle. Holden stated, “They’ve never given us a commitment” to a new aircraft before to launch.
Acting Labor Secretary Julie Su and President Joe Biden, who oversaw the contract negotiations, commended the corporation and its employees on the successful conclusion. “We’ve shown that collective bargaining works,” Biden stated.
Su played a key role in getting both parties closer to a ratified agreement, according to Boeing.
The union vote takes place the day before Americans cast their ballots to choose Biden’s successor, who has been especially pro-union during his time as president.
SLOW RAMP UP
According to two persons briefed on the situation, Boeing will now need weeks to increase plane production and improve cash flow. Analysts predict 737 MAX production will stay in the single digits each month for now. This falls well short of the pre-strike target of 38 per month.
According to the International Association of Machinists and Aerospace Workers (IAM), workers can resume producing aircraft on Wednesday. However, Boeing has cautioned that some employees will require retraining because of the extended time away from the production floor.
Analysts estimated Boeing lost around $100 million daily due to the strike. To maintain its investment-grade credit rating, the aircraft manufacturer raised $24 billion from investors last week.
Ortberg must now rebuild relations with Pacific Northwest machinists. These workers used the strike to vent frustrations built up over a decade of stagnant salaries amid soaring living expenses in the Seattle area.
According to the union, throughout the previous eight years, its members only received four 1% pay increases.
Thomas Amilowski, a 777 employee who voted against the contract, said, “I’m demoralized to say the least,” He claimed that the union leadership had a “defeatist mindset” because they had supported the offer in the initial ballot, which was decisively rejected by almost 95% of members.
59% approval, according to Holden, meant that “there were those who definitely were not happy with the vote.” He did, however, emphasize that employees can mend fences with Boeing executives.
According to Boeing, the average machinist’s salary will increase from $75,608 to $119,309 by the conclusion of the new four-year contract.
Jefferies analysts estimate the salary raise could increase Boeing’s payroll by $1.1 billion over the next four years. A $12,000 ratification bonus for each union member may add another $396 million in outflows.
The turnout was close to 80%, with almost 26,000 union members casting ballots.
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