No end for Boeing labor strike as workers reject latest contract proposal

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SEATTLE (AP) — Boeing factory workers voted against the company’s latest contract offer and remained on picket lines after a six-week strike that halted production of the aerospace giant’s best-selling jetliners.

Local union leaders in Seattle said 64% of International Association of Machinists and Aerospace Workers members who cast ballots on Wednesday voted against accepting the contract offer.

“After 10 years of sacrifice, we still have a lot to make up for, and we hope to do that by resuming negotiations immediately,” John Holden, president of the IAM District 751 union, said in a statement Wednesday evening. “This is democracy in the workplace – and it is also clear evidence that there are consequences when a company mistreats its employees year after year.”

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A Boeing spokesman said officials had no comment on the vote.

The labor standoff comes during an already challenging year for Boeing, which became the focus of multiple federal investigations after a door panel on a 737 Max exploded during an Alaska Airlines flight in January.

The strike deprived the company of much-needed money from delivering new planes to airlines. On Wednesday, the company announced a third-quarter loss of more than $6 billion.

Unionized machinists are assembling the 737 MAX, Boeing’s best-selling plane, along with the 777 or “tri-seven” and the 767 freighter at plants in Renton and Everett, Washington.

The latest offer, which was rejected, included a 35% pay rise over four years. The version that union members rejected when they voted to strike last month included a 25% raise over four years.

The union, which initially demanded 40% pay increases over three years, said annual increases in the revised offer would reach 39.8% when doubled.

Boeing said the average annual wage for mechanics is currently $75,608.

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Boeing workers told Associated Press reporters that the sticking point is the company’s refusal to restore a traditional retirement plan that was frozen a decade ago.

“Pension should have been the top priority. We’ve all said that’s our top priority, along with pay,” Larry Best, a customer quality coordinator who spent 38 years at Boeing, said on a picket line outside the Boeing factory in Everett, Washington. “Now is the prime opportunity to get our pension back, and we all have to stay out and keep working.”

Theresa Pound, a 16-year Boeing employee, also voted against the deal. She said the health plan had become more expensive and that her expected pension benefits would not be sufficient, even when combined with a 401(k) retirement account.

“I’ve put more time into this place than I’ve ever been asked to do. I’ve literally put my blood, sweat and tears into working for this company,” the 37-year-old said. “I’m looking forward to working until I’m 70.” Because I have the possibility that I may not retire depending on what happens in the market.”

The strike began on September 13 and served as an early test for Boeing CEO Kelly Ortberg, who became CEO in August.

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In his first comments to investors, Ortberg said earlier Wednesday that Boeing needs a “radical change in culture,” and laid out his plan to revive the aerospace giant after years of heavy losses and damage to its reputation.

Ortberg reiterated in a letter to employees and on the earnings call that he wants to “reset” management’s relationship with workers “so that we don’t become completely disconnected in the future.” He said company leaders need to spend more time in factories to figure out what’s going on, “prevent problems from escalating, and work better together to identify, fix and understand the root cause.”

Boeing is at a crossroads, said Ortberg, a Boeing outsider who previously ran Rockwell Collins, a maker of avionics and flight controls for airlines and military aircraft.

“Confidence in our company has been eroded. We are saddled with too much debt. We have experienced serious lapses in our performance across the company, which has disappointed many of our customers,” he said.

But Ortberg also highlighted the company’s strengths, including a half-trillion-dollar backlog of aircraft orders.

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“It will take time to return Boeing to its former legacy, but with the right focus and culture, we can become an iconic company and a leader in aviation again,” he said.

In recent weeks, Ortberg announced widespread layoffs — about 17,000 people — and a plan to raise enough money to avoid filing for bankruptcy.

Boeing hasn’t had a profitable year since 2018, and Wednesday’s numbers represent the second-worst quarter in the manufacturer’s history. Boeing lost $6.17 billion in the period ending September 30, with an adjusted loss of $10.44 per share. Analysts surveyed by Zacks Investment Research had expected a loss of $10.34 per share.

Total revenue was $17.84 billion, which was in line with Wall Street estimates.

The company burned through nearly $2 billion in cash in the quarter, weakening its balance sheet laden with $58 billion in debt. Chief Financial Officer Brian West said the company will not achieve positive cash flows until the second half of next year.

Boeing’s fortunes deteriorated after two 737 MAX planes crashed in October 2018 and March 2019, killing 346 people. Safety concerns were renewed last January, when a panel blew up a Max plane during an Alaska Airlines flight.

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Ortberg needs to convince federal regulators that Boeing is overhauling its safety culture and is ready to boost production of the 737 MAX — a crucial step to bring in much-needed cash. But that can only happen after the striking workers return to their jobs.

Early in the strike, Boeing made what it called its “best and final” offer. The proposal included a 30% wage increase over four years, and angered union leaders because the company announced it to striking workers through the media and set a short deadline for ratification.

Boeing backed down and gave the union more time. However, many workers stressed that the offer is still not good enough. The company withdrew the proposed contract on October 9 after negotiations collapsed, and the two sides announced the latest proposal on Saturday.

Charles Fromong, a mechanic who has worked at Boeing for 38 years, said Wednesday night after the results were announced that the company needs to take care of its workers.

“I feel sorry for the young people,” he said. “I’ve spent my life here and I’m getting ready to leave, but they deserve a pension and I deserve a raise.”

Boeing’s last strike, in 2008, lasted eight weeks and cost the company about $100 million a day in deferred revenue. The 1995 strike lasted for 10 weeks.

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Koenig reported from Dallas. Lindsay Wasson in Everett, Washington, contributed to this report.

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