Boeing workers vote to end 7-week strike, accept new contract with 38% raise

Boeing’s West Coast factory workers accepted a new contract offer on Monday, ending a bitter seven-week strike that halted most jet production and deepened a financial crisis at the troubled planemaker.

The union said members voted 59 per cent in favour of the new contract, which includes a 38 per cent pay rise spread over four years, easing pressure on new Boeing CEO Kelly Ortberg after two previous offers were voted down in recent weeks.

“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.”

However, Boeing refused to meet strikers’ demand to restore a company pension plan that was frozen nearly a decade ago. 

The end of the first strike in 16 years by Boeing’s largest union provides welcome relief for a company that has lurched from one setback to the next since a door panel blew off a near-new 737 MAX plane in mid-air in January.

In a message to Boeing employees after the vote, Ortberg said he was pleased the union had ratified a deal.

“While the past few months have been difficult for all of us, we are all part of the same team,” he said. “There is much work ahead to return to the excellence that made Boeing an iconic company.”

Around 33,000 machinists who work on the best-selling 737 MAX jet, as well as the 767 and 777 wide-bodies, have been on strike since Sept. 13, demanding a 40 per cent wage increase and the restoration of a defined-benefit pension they lost a decade ago for a 401(k) retirement plan.

Old pension not restored

“I’m ready to get back to work,” said David Lemon, a worker in equipment calibration certification in Seattle who voted in favour of the contract.

He calculated that the pay hike and a four per cent bonus — the guaranteed minimum annual payout to the reinstated incentive plan — amounted to the 40 per cent increase they’d gone after. “We got there,” he said.

The old pension will not be restored, but workers received a bump to company matching contributions for their 401(k) plans.

Boeing also promised to build the next airplane in the Seattle area. “They’ve never given us a commitment” to a new airplane before launch, Holden said.

U.S. President Joe Biden and acting Labour Secretary Julie Su, who facilitated the contract talks, congratulated workers and the company on the outcome. “We’ve shown that collective bargaining works,” Biden said.

Boeing said Su was instrumental in moving both sides toward reaching a ratified deal.

Biden has been particularly supportive of unions as president, and the union vote comes the day before Americans go to national polls to pick his successor.

Boeing will now take weeks to ramp up plane production and boost cash flow, with 737 MAX output expected to languish in the single digits per month for some time, according to two people briefed on the matter, far short of the 38 a month targeted before the strike.

Strike cost $100M US a day

Workers can start returning to building planes from Wednesday, the International Association of Machinists and Aerospace Workers (IAM) said, although Boeing has warned that some people will have to be retrained due to the prolonged period away from the factory floor.

The strike was costing Boeing around $100 million US a day in lost revenue, analysts said, prompting the plane-maker to raise $24 billion from investors last week in a bid to preserve its investment-grade credit rating.

Ortberg now needs to reset relations with machinists in the Pacific Northwest who have used the strike to vent anger built up over a decade when wages have lagged inflation and the cost of living in the Seattle area has soared.

The union has said its members earned just four one-per-cent-wage increases over the last eight years.

“I’m demoralized to say the least,” said 777 worker Thomas Amilowski, who voted against the contract. He said the union leadership, which had backed the offer in the first vote that was resoundingly rejected by nearly 95 per cent of members, had a “defeatist mindset.”

Holden noted that 59 per cent approval meant “there were those who definitely were not happy with the vote.” But he added that workers can rebuild the relationship with Boeing leadership.

Boeing has said the average annual machinists’ pay at the end of the new four-year contract will be $119,309 US, up from $75,608 previously.

The pay increase may add $1.1 billion to Boeing’s wage bill over the four years, while a $12,000 ratification bonus for each union member could result in another $396 million in outflows, according to analysts at Jefferies.

More than 26,000 union members voted, putting turnout near 80 per cent.