EVERETT—Boeing announced Tuesday evening it has withdrawn its “best and final” offer proposed to IAM 751 & W24 union members on September 23, now leaving 33,000 striking workers and an industry anxiously awaiting next steps. Boeing spokesperson declined to elaborate on what those next steps will be when asked by the Lynnwood Times. Also, Boeing’s commitment to building its next new airplane in Washington and Oregon are no longer guaranteed.
“Unfortunately, the union did not seriously consider our proposals,” Stephanie Pope, Boeing CEO/BCA President released in a statement to all Boeing Commercial Airplane employees in Washington state and Oregon on Tuesday, October 8. “Instead, the union made non-negotiable demands far in excess of what can be accepted if we are to remain competitive as a business. Given that position, further negotiations do not make sense at this point and our offer has been withdrawn.”
According to the “best and final” offer proposed on September 23, the average annual machinist pay at the end of the proposed 4-year contract would increase from $75,608 a year to $111,155. In its final offer to IAM 751 & W24 members:
- Boeing committed to building its next new airplane, in the Puget Sound region.
- A general wage increase of 30% over four years.
- A ratification bonus of $6,000.
- A reinstatement of the Aerospace Machinists Performance Program (AMPP) bonus.
- A one-to-one match on the first 8% an employee contributes to Boeing’s 401(k) plan
- A lower cost share for health care
- A new employee annual floating holiday
IAM says Boeing’s final offer doesn’t go far enough, demanding a pay increase of 40 percent and for Boeing to reinstate the company’s defined-benefit pension program, which members voted in January of 2014 to replace with Boeing’s 401(k) plan.
“The [Boeing] company was hell-bent on standing on the non-negotiated offer that was sent directly to the media on September 23, 2024,” IAM 751 union released in a statement on X shortly after Pope’s proposed contract withdraw announcement. “They refused to propose any wage increases, vacation/sick leave accrual, progression, ratification bonus, or the 401k Match/SCRC Contribution. They also would not reinstate the defined benefit pension.”
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.
The union in its announcement did state that it “remains ready to continue [to] mediated or direct talks” for a mutually beneficial agreement. It will be releasing a survey to union members to understand “priorities.”
“’One day longer, One day stronger’ is more than just a catchphrase. It’s our battle cry that we must all use as we stand together, united and defiant against one of the most powerful companies in the world,” IAM wrote in its statement on X to union members.
Representatives Rick Larsen (WA-02) and Suzan DelBene (WA-01) joined striking Boeing IAM 751 workers on the picket lines outside of Boeing’s Everett factory on Friday, September 27, to hear their concerns and to show support to union members’ efforts to negotiate a fair contract with Boeing.
The Executive Board of the Society of Professional Engineering Employees in Aerospace (SPEEA), Boeing’s professional aerospace worker union, voted to approve a donation of $99,000 to the IAM 751 strike fund to assist in strike efforts against the Boeing Company.
Starting Tuesday, October 1, all 33,000 striking workers lost their Boeing-sponsored health care benefits and the company two weeks earlier began furloughing tens of thousands of additional employees—including executives and managers—effectively reducing their take home pay by 25%. Boeing has also instituted a hiring freeze and paused all pay increases for its salaried workforce.
“With production paused across many key programs in the Pacific Northwest, our business faces substantial challenges, and it is important that we take difficult steps to preserve cash and ensure that Boeing is able to successfully recover,” wrote Boeing CEO and President Kelley Ortberg on September 18 to employees announcing furloughs.
Pope, in her message on October 8, acknowledged that the steps the company is taking to preserve cashflow is not taken lightly and that the strike has “deeply affected our business, our customers and our communities.”
“Our leadership team has been doing all we can to find common ground with the union,” Pope wrote adding, “We remain committed to finding a resolution and will work with the union when they are ready to bargain an agreement that recognizes our employees and preserves our company’s future.”
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 local communities.
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 7.6% 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.
On October 8, Boeing announced its third quarter deliveries of 2024. Despite the strike, the company delivered a total of 116 aircraft during this period—737 (92), 787 (14), and 767 (6). Boeing is set to release detailed financial results for its third quarter on October 23, 2024. Future delivery operations may be impacted the longer the strike continues.
