EVERETT—Three of the highest-ranking congressional leaders—U.S. Senator Maria Cantwell (D-WA), chair of the Senate Committee on Commerce, Science, and Transportation, Representatives Adam Smith (D, WA-09), ranking member of the House Armed Services Committee, and Rick Larsen (D, WA-02), ranking member of the House Transportation & Infrastructure Committee—along with president pro tempore of the United States Senate and chair of the Senate Appropriations Committee, Senator Patty Murray (D), in a letter sent on Tuesday, October 15, to Boeing and the IAM machinists union leadership, calls for a mutually beneficial resolution to the month long strike.
“With over 42,000 single-aisle and wide body commercial aircraft projected to be manufactured over the next twenty years, valued at $8 trillion, now is the time to rebuild the historic partnership between management and workers in order to restore Boeing’s reputation for engineering and manufacturing excellence,” they wrote. “This will require investing in next generation manufacturing techniques, innovative new materials, and providing workers with wages and benefits that acknowledge the essential and irreplaceable work they perform for the Company.”
The cash-starved aerospace juggernaut has been crippled by the strike.
Today’s letter comes as Boeing announced earlier that day it plans to raise $25 billion through stock and debt offerings and a $10 billion credit agreement with major lenders to weather its current crisis, Reuters reports.
Jefferies analyst Sheila Kahyaoglu estimated that Boeing is taking a $1.3 billion hit to free cash flow for each month of the strike, according to Barrons.
Earlier this year, the S&P Global and Moody’s lowered the aircraft manufacturer’s creditworthiness in April to BBB- (the firm’s lowest grade), the FAA capped 737 Max production to 38 planes per month following the Alaska air incident in January, plagued by delays of its 777X production, and setbacks meeting mandated international “greener” emission standards for its 767 aircrafts, resulted in the company burning through billions of dollars well before September’s strike.
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 a 12.3% hit since September 3 (Fri, Aug 30: 173.74, Oct 15: 152.35), 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.
Aerospace is a multi-billion-dollar industry in Washington state and congressional leaders aren’t holding back any punches. 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.
Murray, Cantwell, Larsen, and Adams requested both parties to “redouble your efforts to reach a mutually beneficial resolution” after negotiations stalled on October 8 followed by Boeing filing an unfair labor practice charge with the National Labor Relations Board (NLRB) against IAM—specifically 751 president Jon Holden and W24 president Brandon Bryant—alleging “bad faith bargaining.”
In its message to union members regarding the filing, IAM 751 wrote on X: “Boeing is simply attempting the same old bargaining tactics. They are trying to deal directly with the membership and sow seeds of doubt and division in our Union. They hope to drive a wedge within our Union. There is no chance of that. We are stronger than ever and united on every picket line.”
Senator Cantwell and Representative Pramila Jayapal (WA-07) joined hundreds of union members for a Strike Rally at Seattle Union Hall on October 15.
“Incredible strength from striking Machinists! There is no Boeing without IAM751,” wrote Rep. Jayapal on X about her experience.
So great to be with striking @IAM751 machinists today! Solidarity forever ✊🏽 pic.twitter.com/lOF4iyTHBE
— Pramila Jayapal (@PramilaJayapal) October 15, 2024
Thirty members of the Congressional Progressive Caucus, led by Jayapal, called on Boeing and union negotiating teams to “return to the bargaining table” a day before Boeing announced it will reduce its workforce by 10 percent—17,000 employees—due to the ongoing strike. The aerospace company, also on October 11, announced it will delay delivery of its 777X program by a year to 2026 and decommission the commercial program of its 767 freighter.
“We know these decisions will cause difficulty for you, your families and our team, and I sincerely wish we could avoid taking them,” Boeing President and CEO Kelly Ortberg wrote in his email to employees. “However, the state of our business and our future recovery require tough actions. We will be transparent with you regarding the timing and impact of these steps, and we will be professional and supportive to everyone along the way.”
The machinist unions are demanding a 40% increase to general wages and the reinstatement of its pension plan that union members voted to end in 2014.
According to Boeing’s “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, up from 25%.
- A ratification bonus of $6,000, up from $3,000.
- 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
Boeing alleges that in its October 7 and 8 sessions, the company presented the IAM negotiating team “further improvements to retirement and incentives” above its September 23 proposal that included “guaranteeing a portion of the AMPP” and increased “annual pension payments for those employees who had Boeing pensions.” Boeing claimed the negotiating team refused to budge leading to the company withdrawing its offer and 33,000 union members awaiting “next steps.”
“After two days of fruitless discussions, the Company withdrew its offers and ended mediation, rather than continuing to bargain against itself,” Boeing stated in its NLRB filing.
Boeing also claims that union leadership violated its own Constitution by refusing to allow its members to vote on the September 23 proposed contract.
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.
“After talking with the workers [on the picket line], there’s this long simmering tensions that seem to go back beyond the last couple of years, back maybe 10 to 12 to 15 years,” Lasen said. “The company needs to recognize that.”
However, congressional leaders in Tuesday’s letter remain hopeful reminding Boeing and union leadership of their mutually beneficial symbiotic relationship writing:
“IAM 751 and W24 represent a vital workforce in the Pacific Northwest and for nearly a century have made it possible for Boeing to produce aircraft that fly millions of passengers each day, connecting communities and economies around the world. With these contributions in mind, we hope you will expeditiously work out a fair and durable deal that recognizes the importance of the machinist workforce to Boeing’s future, the aerospace economy of the Pacific Northwest, and the nation.”
One Response
The difference between the first offer and the second “final” offer is that the latter does not have a $130MILLION annual asset managed by the IAM. A deal that I suspect was offered in exchange for “No Strike”. A deal that was exuberantly endorsed by the IAM. Now, Boeing is no longer offering the golden goose and the IAM is unwilling to present the generous offer to the members, subsequently Boeing has rescinded that offer. And yet, NO ONE IS REPORTING THIS GLARING DELTA BETWEEN THE TWO OFFERS.