In a significant development for Boeing and its workforce, members of the International Association of Machinists (IAM) voted on Monday to accept the company's latest contract offer, concluding a nearly two-month-long strike. This prolonged labor action, the most extensive in over 25 years, cost Boeing billions in delayed production and placed additional strain on the aerospace giant already grappling with financial and operational challenges.
IAM members accepted the new contract by a 59% vote, marking a reversal from their near-unanimous rejection of the company's previous offers. Union leaders praised the outcome, calling it a hard-won victory. "I'm proud of our members. It is a win," said Jon Holden, president of IAM's largest local at Boeing and chief negotiator. "They achieved a lot, and we're ready to move forward."
Boeing, which has experienced a rocky financial period following production and safety setbacks with its 737 Max fleet, also expressed relief at the resolution. "While the past few months have been difficult for all of us, we are all part of the same team," CEO Kelly Ortberg said in a statement. Ortberg, who took the helm shortly before the strike, acknowledged the need for collaboration to restore Boeing's position as an industry leader.
The approved contract includes a substantial wage increase for Boeing's machinists, starting with an immediate 13% raise, followed by subsequent hikes of 9% in each of the next two years, and 7% in the fourth year. By the end of the four-year term, the workers' pay will have risen by 43%, raising the average annual wage to $119,309. Each worker will also receive a $12,000 ratification bonus, part of which can be allocated toward retirement savings.
Despite the new contract's benefits, a core issue-the restoration of traditional pensions-remains unresolved. Boeing has maintained a defined contribution plan, like a 401(k), since discontinuing its pension plan in 2014. Holden acknowledged that pensions were a sticking point, noting that some union members felt strongly about restoring them. "Many of the members were fighting to get the pensions back. It's a righteous fight," he said, adding that they would "continue working on that issue."
The pension dispute highlights a broader trend in corporate America, as many companies move away from defined-benefit pension plans that guarantee lifetime payments. According to the Employee Benefit Research Institute, just 8% of private-sector workers now have access to such plans, down from 39% in 1980.
The impact of Boeing's strike extended beyond its own workforce, as production delays affected approximately 10,000 suppliers across all 50 states. Washington Governor Jay Inslee emphasized the importance of Boeing's contribution to the state economy. "Washington is home to the world's most skilled aerospace workers, and they understandably took a stand for the respect and compensation they deserve," he said in a statement after the vote.
For Boeing, the economic stakes of the strike have been steep. According to Anderson Economic Group, the work stoppage cost the company around $6.5 billion through last week, while employees lost an estimated $600 million in wages. These losses add to the nearly $40 billion in core operating losses Boeing reported over the past several years due to the 737 Max grounding and the pandemic's impact on air travel demand.
The strike also halted deliveries of the 737 Max and other models, including freighters, as Boeing receives the bulk of its revenue upon delivery. While wages comprise less than 10% of Boeing's total production costs, the halted production dealt a severe blow to cash flow, adding urgency to resolve the dispute.
The IAM had urged members to accept the contract despite the lack of a pension restoration, with leaders stating that continued rejection might lead to a less favorable offer. "It is time for our members to lock in these gains and confidently declare victory," the local union district said in a pre-vote message.
President Joe Biden congratulated the machinists and Boeing for reaching an agreement that he said upholds fairness in the workplace. The administration played an active role in mediating negotiations, with Acting Labor Secretary Julie Su intervening multiple times. The settlement, Biden said, reinforces Boeing's standing as a "critical part of America's aerospace sector."
Boeing's prolonged labor dispute represents another hurdle in what has been a tumultuous year for the aerospace titan. The company has faced production challenges, safety concerns, and reputational damage from the high-profile failures of its 737 Max jets, which were grounded for 20 months after two deadly crashes. Earlier this year, Boeing faced a federal investigation after an incident in which a door plug detached from a 737 Max shortly after takeoff, highlighting ongoing safety concerns.
