Boeing Machinists agreed to a new labor contract Monday, ending a costly seven-week strike that crippled much of the company's aircraft production and worsened mounting losses.
Machinists voted 59% in favor of the new contract, which includes 38% wage increases over four years and other improvements.
The approval comes as a relief to Boeing's new CEO, Kelly Ortberg, who took the top job in August to steer the company through its safety and manufacturing crises. The company raised more than $20 billion in a stock sale last week to address its financial woes after warning it would likely burn cash through 2025.
Ortberg said last month that Boeing would cut 10% of its 170,000 employees, including managers, executives and clerks, to cut costs, with layoff notices to be sent out in mid-November. He painted a picture of a leaner Boeing that focused on its core commercial and defense businesses.
“Although the last few months have been difficult for all of us, we are all part of the same team. We can only move forward if we listen and work together,” said Ortberg after signing the contract. “There is still much work ahead to return to the excellence that made Boeing an iconic company.”
Boeing will now be able to restart production, which is crucial to the company's recovery as the majority of the aircraft's price is paid to customers upon delivery. But it will take some time to reach target production rates, especially for the 737 Max, Boeing's cash cow.
“While ending the strike and returning workers to factories is a significant step in the right direction, resuming the strike will take time,” said Bank of America aerospace analyst Ron Epstein. He said some workers needed to be retrained.
The machinists who build aircraft such as the best-selling 737 Max, the 777 and the 767 must return to work no later than November 12, the union said. They could return as early as Wednesday.
“Yesterday's resolution of the strike has, in our view, borne little fruit,” Jonathan Root, senior vice president at Moody's Ratings, said in a statement Tuesday. “The challenge remains to remove the obstacles that stand in the way of achieving and subsequently maintaining strong positive free cash flow.”
President Joe Biden spoke with union leaders and Boeing's CEO on Tuesday to congratulate them on the deal, the White House said. Acting Labor Secretary Julie Su took part in the negotiations and flew to Seattle to meet with the union and the company, a leading U.S. exporter and defense contractor.
“This contract provides a 38% wage increase over four years, improves workers’ ability to retire with dignity, and supports equity in the workplace,” Biden said in a statement. “This contract is also important for Boeing’s future as an important part of America’s aerospace sector.”
Third vote
It was the machinists' third vote since September, when the 33,000 workers, mostly in the Seattle area, walked off the job after overwhelmingly rejecting a proposal that would have called for a 25% wage increase, far less than that proposed by the Union targeted 40%. They voted against another watered-down proposal late last month.
An International Association of Machinists and Aerospace Workers, District 751 union member counts ballots after a vote on a new Boeing contract proposal at a union hall during an ongoing strike in Seattle, Washington, U.S., November 4, 2024.
David Ryder | Reuters
Union pushed for approval
“This is a victory. We can hold our heads high,” said Jon Holden, president of District 751 of the International Association of Machinists and Aerospace Workers, as he announced the results late Monday.
According to Boeing, the machinist's salary at the end of this contract proposal will average $119,309. The first wage increase is 13%. The deal also increases 401(k) contributions and a signing bonus of up to $12,000, or a combination of a $7,000 bonus and a $5,000 401(k) deposit.
Workers had complained about the skyrocketing cost of living in the Seattle area, where most Boeing planes are made.
However, the union had warned that the latest deal, proposed last week, may be as good as workers can expect.
“In every negotiation and every strike, there comes a point where we have gotten everything we could through negotiations and through the restraint of our workforce,” IAM District 751 said in a statement at the time. “We are at this point now and risk declining or reduced supply in the future.”
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