(Bloomberg) — Boeing Co. and the union representing 33,000 striking workers have reached a new agreement to end a work stoppage that has crippled the company’s aircraft manufacturing for more than a month and squeezed its finances.
Most read from Bloomberg
The proposal reached overnight in Seattle includes a 35% pay increase spread over four years, a guaranteed annual bonus of at least 4% and an additional bonus of $7,000 if The workers agreed to the contract. . The ratification vote is scheduled for October 23.
The union cited the help of US Labor Secretary Julie Su, who returned to Seattle to help jumpstart the stalled talks. The Labor Department said Friday that Su met several times with both the union and new Boeing CEO Kelly Ortberg.
“We look forward to our employees voting on the negotiated proposal,” Boeing said via email.
A potential breakout after weeks of acrimony could provide a boost to Ortberg, who joined Boeing in August with a mandate to revamp operations. He is scheduled to address analysts and investors for the first time on October 23, when Boeing reports third-quarter results.
The tentative agreement between Boeing and the union does not guarantee that workers will comply either. When the first proposal, supported by both sides, was put to a vote last month, employees overwhelmingly rejected it.
Boeing has since come back twice with reduced offers, first with a 30% raise that it takes directly to workers, and now with the latest plan on the table that is 10 percentage points higher than the initial offer.
Pressure installation
Pressure is increasing on Boeing, its suppliers, and striking workers as the strike enters its sixth week. The shutdown, which began on September 13, extends along the West Coast and forced Boeing to shut down assembly lines for its 737 MAX, 767 and 777 aircraft.
The planemaker is moving ahead with plans to cut 10% of its workforce, the first step toward a broader reorganization of its business under Ortberg. The suffering is also beginning to spread across Boeing’s supply chain, with Spirit AeroSystems Holdings Inc. warning. It will have to lay off 700 workers building components for the 767 and 777 programs.
Boeing has taken initial steps to raise the capital it will need to support its operations and maintain its investment-grade credit rating. The company has arranged a $10 billion credit facility with banks and has filed a shelf filing to raise up to $25 billion over the next three years.
The IAM District 751 strike marks the first major labor conflict at Boeing in 16 years. While hourly workers are demanding a 40% pay increase and improved retirement benefits, they are driven by resentment at receiving paltry pay increases over the past decade while top executives were generously rewarded.
The latest agreement addresses many of the frustrations workers have expressed about the company’s previous proposals. But it does not restore Boeing’s defined benefit pension plan, a potential sticking point for some members.
Instead, Boeing will increase its contributions to workers’ retirement savings plans. The company will make a one-time contribution of $5,000 to 401(k) plans for all eligible workers, exactly matching their contributions of up to 8% of payroll.
–With assistance from Alison Verserel and Danny Lee.
Most read from Bloomberg Businessweek
©2024 Bloomberg L.P
Comments are closed, but trackbacks and pingbacks are open.