Boeing's ongoing labor strike shows no sign of ending soon, as factory workers voted to reject the company's latest contract offer, extending the strike that has already lasted more than five weeks. On Wednesday, 64% of Boeing machinists voted against the new deal, which included a proposed 35% wage increase over four years. The rejection marks a significant setback for Boeing's new CEO, Kelly Ortberg, who has made resolving labor issues a priority as the aerospace giant grapples with financial woes.
The strike, involving 33,000 machinists, began in mid-September and has halted production of key aircraft models, including the 737 MAX, the 767, and the 777. The union's demands include a 40% pay raise and the reinstatement of a defined-benefit pension plan, which was removed in a 2014 deal that left lasting discontent among workers. "This membership has gone through a lot," Jon Holden, the union's lead contract negotiator, said after the vote. "There are some deep wounds."
Boeing has seen its share of challenges in recent years, from safety issues related to the 737 MAX to production delays and cost overruns. The financial strain is palpable, as the company posted a $6 billion quarterly loss, its largest since 2020. Boeing is also burning through cash, with the strike alone costing an estimated $1 billion per month, according to S&P Global Ratings.
The rejected contract would have given workers a 35% raise over four years, along with a $7,000 signing bonus and increased 401(k) contributions. However, many workers, already upset about the loss of their pensions and rising living costs, were unsatisfied with the offer. "They took a bunch of numbers and moved them around to make them look like they're giving us more than they were," said Josh Hajek, a Boeing employee. "We're ready to go back on strike until we get a better deal."
Ortberg, who took over as CEO in August, has acknowledged the severity of the situation, calling the vote a "defining moment" for the company. He had initially aimed to improve relations with factory workers, a contrast to his predecessors. However, this latest setback suggests those efforts may be stalling. "There's a feeling that he hasn't handled this as well as he might have," said Richard Aboulafia, managing director of AeroDynamic Advisory. "They've got to get this done, and they're in a position of weakness."
Adding to Boeing's woes is the fragile state of the broader aerospace supply chain, which is still recovering from the impact of the pandemic. Spirit AeroSystems, a major supplier of fuselages, has warned that if the strike continues beyond November, it will be forced to furlough more workers and implement layoffs. The company has already announced a 21-day furlough for 700 employees.
The financial pressures on Boeing are significant. The company has already announced plans to cut 17,000 jobs and is exploring ways to raise up to $15 billion from investors to help maintain its investment-grade credit rating. Delays in aircraft production have led some airlines to trim their schedules, further compounding the impact on Boeing's bottom line.
Union leaders remain hopeful that a resolution can be reached soon. "I want to get back to the table," said Holden. "Boeing needs to come to the table as well. Hopefully, we can have some fruitful discussions with the company and Mr. Ortberg." The union has also sought assistance from the U.S. government, with Holden indicating that he would reach out to the White House for additional support in negotiations.
Despite the labor strife, some workers feel conflicted about prolonging the strike. "I can't really afford to say no to this contract. I have to go back to work," said Terrin Spotwood, a machinist in Boeing's 737 wing assembly line. However, many remain steadfast in their demands, citing the concessions they made in the past and their belief that now is the time to push for a better deal. "We're going to get what we want this time," said Donovan Evans, who works in the 767 jet factory. "We have better legs to stand on than Boeing."
