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SEATTLE—The International Association of Machinists (IAM) Negotiation Committee blasted Boeing for emailing its “best and final” offer “directly to all members and the media without any prior communication from your Union.”

“This tactic is a blatant show of disrespect to you – our members – and the bargaining process,” wrote the Union Negotiating Committee in a statement on X released Monday evening.

IAM added, “These direct dealing tactics are a huge mistake, damage the negotiation process, and attempt to go around and bypass your Union negotiating committee.”

IAM accuses Boeing of deceit and “trying to drive a wedge” between union members and “weaken” its “solidarity with this divisive strategy.”

On Monday morning, Boeing announced that it presented a final contract offer to the leaders of IAM 751 & W24 for consideration to ending its strike with production workers. If approved by union members, according to Boeing, the average annual machinist pay at the end of the proposed 4-year contract would increase from $75,608 a year to $111,155.

According to the “best and final” offer, Boeing committed to building its next new airplane in the Puget Sound region and Portland, reinvesting in tens of thousands of current and future employees and their families. The updated offer includes:

• A general wage increase of 30% over four years, up from 25%
• A ratification bonus from $6,000, up from $3,000
• A reinstatement of the Aerospace Machinists Performance Program (AMPP) bonus, which was removed from the previous proposal and replaced with an IAM 401(k) plan. The annual bonus has historically been 3-6% lumpsum of salary.
• An increased company match on Boeing 401(k) to 100% of the first 8% an employee contributes, plus continued automatic 4% company contributions.
• Paid parental leave would begin January 1, 2025. At that time, one can also use this benefit as an employee welcomed a new child between September 13 and December 31, 2024.
• A lower cost share for health care, plus plan improvements such as a new free primary care benefit and a new company-paid long-term disability plan.
• Effective January 1, 2025, and each January 1 thereafter, an employee would receive one annual floating holiday to be used in a full day increment. Employees can use this floating day on a holiday or any other day they choose with advance scheduling. It must be used before the end of each year.

However, Boeing stated that the sweetened offer is contingent upon ratification by 11:59 p.m. PST, Friday, September 27, 2024.

IAM cried foul stating that Boeing “misled the media by wrongfully stating the Union membership is required to vote on their latest offer,” but then contradicts by stating the September 27^th deadline is not enough time “to present details to the membership or even secure all voting locations.”

The negotiating team stated that a Friday, September 27 vote will not take place because Boeing “has refused to meet for further discussion.”

In a turn of events, Boeing announced on the afternoon of Wednesday, September 24, that it will give the union additional time to allow a vote by IAM 751 and W24 members.

“This strike is affecting our team and our communities, and we believe our employees should have the opportunity to vote on our offer that makes significant improvements in wages and benefits,” Boeing released in a Wednesday statement. “We’ve reached out to the union to give them more time and offer logistical support once they decide to vote.”

On Tuesday, September 17, the IAM Negotiating Committee met with Boeing and the Federal Mediation and Conciliation Service (FMCS) to resume contract discussions. In a statement on its website to striking workers regarding the progress of last Tuesday’s meeting, the union alleged that Boeing “was not prepared and was unwilling to address the issues you’ve made clear are essential for ending this strike: Wages and Pension.”

In its latest announcement on September 23, IAM states that talks “broke down” on September 18 after Boeing “refused to make an offer that addressed the priorities of our membership.”

IAM’s outstanding demands

IAM is asking for a 40% pay increase instead of the 30% proposed (or $35,500 average pay increase), and for Boeing to reinstate the company’s defined-benefit pension program.

However, in January of 2014, union members approved ending its pension plan by September 2016 in favor of a new defined-contribution 401(k) plan. Just three months later, Boeing announced that it will be cancelling its pension for a new defined-contribution 401(k) plan for all nonunion employees starting January 2016 in an effort to improve cashflows and its long-term financial health, a strategy,  which in hindsight, no doubt contributed to Boeing weathering its recent financial ills.

“Our objective in making this transition is twofold: continue providing an attractive, market-leading retirement benefit contributing to employees’ retirement security, while also assuring our competitiveness by curbing the unsustainable growth of our long-term pension liability,” said Tony Parasida, senior vice president of Human Resources and Administration in Boeing’s 2014 announcement.

Since 1975 the percentage of US workers with access to a retirement benefit plan with traditional pension has waned from 29% to 12% (or 12 million employees) by 2020; whereas defined-benefit plans increased to 88% (or 85.3 million employees) according to a CNN study. The primary reason for employers transitioning to defined-benefit plans is cost—”Committing to pay employees for the rest of their lives can be expensive and unpredictable,” the article states.

“Cost certainty was also important,” Craig Copeland, director of wealth benefits research at the Employee Benefit Research Institute told CNN. “Under the DB plans, the costs necessary to fund the plan could change every year depending on rates of return in the markets and growing expected longevity. Some years, no contributions would be necessary, whereas the next year they could be substantial.”

“By contrast, defined-benefit plans costs are more predictable,” Copeland added.

“They have contributions and plan administration fees paid each year, but market changes [don’t] change what the company [is] required to pay,” said Copeland.

When Boeing transitioned to its newly defined-benefit 401(k) plan in 2016 it was able to reinvest hundreds of millions of dollars per year back into the company for long term financial stability and growth.

Reactions to Boeing’s “Best and Final” offer

Reaction to Boeing’s “best and final” offer is getting mixed reviews on both the IAM Union District 751 and Machinist Union X accounts, far from the overwhelming support for the union’s September 12 vote to strike.

“Not far enough? No wonder Boeing went straight to the IAM members. It’s a great offer. 30% wage increase ratification bonus – doubled Increased 401K Next airplane built in WA Annual bonus Let the members VOTE,” Scott wrote.

“I’m confused. You ‘recommended’ we accept the first offer No to this offer a better offer “doesn’t go far enough” this is counterproductive let’s not let our egos get the best of us I’m getting close to no confidence you guys are messing with people’s lives. Don’t toy with us,” wrote Michael Wolfe.

Other posts shared their lack of confidence in union leadership.

“Well well: @IAM751leadership totally misread the support for the first @Boeing offer and supported it, but now plays hardball. Amateurs,” wrote Richard_on_aviation.

Comments in favor of union leadership ranged from “solidarity” to “shady” tactics by Boeing.

“@KING5Seattle this is the piece of the puzzle that you and all other media are missing. This was a NON- NEGOTIATED deal put forth directly to IAM 751 members by the company. No they will not be voting on this offer. It was another shady move by the company,” wrote Dubs Fan.

“Thank you for calling them out on this. It’s not okay what they did, and it should have some consequences,” Melissa wrote.

As the September 27^th ratification deadline approaches, union leadership shared that although an official member vote will not be allowed, a survey is “being created and sent to our members via email for direct input on the company’s offer.”

This may indicate that union leadership is open to the idea of accepting Boeing’s “best and final” offer and wanting to make an informed decision with member input to end the strike quickly.

“We will gather your opinion on whether this offer meets your demands,” the IAM Negotiating team stated.

If a deal between Boeing and IAM isn’t reached by the end of September 30, approximately 33,000 striking workers will lose their Boeing-sponsored health care benefits. However, workers can apply for insurance on Washington Healthplanfinder by following these instructions:

• Visit wahealthplanfinder.org or download the WAPlanfinder mobile app.
• Create or sign in to an account.
• Fill out an application, report that there was a “loss of other coverage” and enter the last day of employer-sponsored coverage to open a special enrollment period.
• Review plan options and select a new insurance plan to enroll in.
• For assistance, select “Get Support” on the Healthplanfinder home page or call 855-923-4633.
• When employer-sponsored health care coverage resumes, make sure to cancel your plan with Washington Healthplanfinder.

Economic Impact of the strike

Boeing on Friday began to furlough tens of thousands of nonunion employees in Washington and Oregon with a 25% pay cut—a move no doubt will impact local economies, especially as peak-holiday retail season approaches.  With both union and nonunion members tightening their wallets because of the strike, seasonal Thanksgiving and Christmas opportunities may not manifest which would have a direct impact within the shopping Mecca of Snohomish County—Lynnwood.

In its September 23^rd public hearing for the City’s 2025-26 Biennial Budget, Finance Director Michelle Meyer shared that 46% of Lynnwood’s $152 million general fund revenue is in sales tax. In a recent article by Washington State Standard, the significant contributing factors to a $500 million drop in state revenue were “capital gains tax receipts and less consumer spending.”

According to the Seattle Metropolitan Chamber of Commerce’s report, in 2023, Boeing supported 82% of industrywide business revenues, 80% of total jobs, and 77% of total labor income generated by Washington’s $71 billion aerospace industry.  An article in HR Digest estimates that Boeing is losing $100 million per day because of the strike.

With S&P Global and Moody’s lowering the aircraft manufacturer’s creditworthiness in April to BBB- (the firm’s lowest grade), the FAA capping 737 Max production to 38 planes per month, delays in 777X production, and setbacks meeting mandated international “greener” emission standards for its 767 aircrafts, the company may soon face a cash crunch as it burns through billions of dollars more than projected.

Boeing hasn’t reported a full-year profit since 2018, a year before two crashes of the 737 MAX jet that led to the grounding of the plane worldwide. Its stock has taken an 8.2% hit since Tuesday, September 3, after Wells Fargo analyst Matthew Akers downgraded the company’s stock valuation stating a problem with free cash flow.

“Boeing carries about $45 billion net debt and (it) must address this before it kicks off the next aircraft development cycle,” Akers said, adding that cutting the debt would consume its cash flow through 2030, Reuters reports.

Jefferies analyst Sheila Kahyaoglu estimated that Boeing would take a $1.3 billion hit to free cash flow for each month of the strike, according to Barrons.

Boeing has instituted a hiring freeze and paused all pay increases for its salaried workforce.

“This strike jeopardizes our recovery in a significant way, and we must take necessary actions to preserve cash and safeguard our shared future,” Boeing Chief Financial Officer Brian West wrote in an email to employees. “Importantly, we will protect all funding for safety, quality and direct customer support work.”

EDITOR’S NOTE: Article updated 3:48 p.m., September 24, 2024, to reflect Boeing’s announcement to extending the deadline to allow union members to vote.

Author: Mario Lotmore