Boeing’s factory workers on the U.S. West Coast, on strike since September 13, will vote on October 30, 2023, on a new wage offer. According to a report from Reuters, this proposal offers a 38% wage increase over four years and includes a $12,000 ratification bonus, aiming to end the strike that has paused Boeing’s jet production and impacted the company’s finances. Around 33,000 machinists from Boeing have refused two previous contract offers, demanding a higher wage increase and the restoration of a defined-benefit pension.
Boeing’s newest contract proposal provides a 38% wage increase, up from a prior offer of 35%, and adds a $12,000 ratification bonus. However, it does not include the defined-benefit pension that workers sought. The union representing the workers mentioned that this offer has improved significantly, although it does not meet all demands. Union leadership endorsed the latest offer, and the machinists’ union also warned that future offers could be less favorable.
Dino Kritikos, managing director at Fitch Ratings, noted, “The proposal’s economics are a material improvement for labor. Union leadership’s endorsement, unlike the most recent proposal, should help further bridge the vote towards ratification.” Some union members believe the proposal is close enough to their initial goal of a 40% wage increase over four years, which could influence the upcoming vote.
Workers’ Reactions and Financial Impact
Despite Boeing CEO Kelly Ortberg’s encouragement to accept the new offer, workers remain divided. Ortberg emphasized the need to “focus on rebuilding the business and delivering the world’s best airplanes,” but the strike has hit both Boeing’s operations and workers’ finances. The strike has halted production of Boeing’s 737 MAX, 767, and 777 jets, leading to a $6 billion loss for Boeing in the third quarter and adding pressure to Ortberg’s efforts to restore Boeing’s business.
Workers have different perspectives on the proposal. Kenneth Vi, a quality inspector, expressed dissatisfaction, saying, “It’s not enough. They haven’t even reached our demand.” However, others, like Kate McKinney, who works on the 737 MAX, plan to vote in favor. “I want to get back to work. Bills are what they are,” McKinney said.
Wall Street analysts have closely monitored social media and Reddit discussions, where worker sentiment has mirrored the outcomes of previous votes. Some analysts believe the latest offer, with its lump-sum bonus, will sway some union members. Workers can choose to allocate $5,000 of the ratification bonus to their 401(k) retirement account or take it as cash. Jefferies analyst Sheila Kahyaoglu pointed out that this flexibility, along with the option to contribute 20% of their salary to retirement accounts, could attract some members.
Financial Outlook and Share Performance
The strike has taken a toll on workers, who have reportedly lost an average of $10,400 in wages. This loss has overshadowed the average first-year pay increase under the new offer, as Kahyaoglu observed. Boeing’s financial position may also influence the outcome of negotiations. Kahyaoglu noted that Boeing’s recent capital increase has placed it in a stronger position to negotiate, which may have contributed to the improved terms.
Since the strike began, Boeing’s stock has dropped by 8.3%, reflecting the impact of the production halt on its financial health. Ben Tsocanos, aerospace director at S&P Global Ratings, suggested that the length of the strike and the progress of wage negotiations could indicate a higher chance of resolution. “It looks promising since it is approaching the union’s original target of a 40% wage increase over four years. The fact that the strike has lasted almost two months is also a factor in favor of a deal,” Tsocanos said.
Machinists will vote on the offer October 30, 2023, marking a critical point in negotiations for both Boeing and its workers. If accepted, this agreement will likely restore Boeing’s production and bring employees back to work.
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