Boeing union members angry over size of negotiated 25% raise may sink tentative contract deal

In an exclusive interview, Jon Holden, president of IAM District 751, said he understood the angry response from members still seething over a 2014 deal that hiked health care costs and stripped away pensions. He defended the sprawling agreement unveiled Sunday as the best his team could obtain during the final frenzied days of negotiations that included a brief appearance by Boeing’s new Chief Executive Officer, Kelly Ortberg.

“We got as much as we could in collective bargaining, short of a strike,” Holden said. “But rightfully so, members are angry. It’s now in their hands, as it is supposed to be.”

While investors welcomed the preliminary deal — sending Boeing shares up 3.4% in New York on Monday — it’s far from certain that the 33,000-member union will accept the offer. Maintaining labor peace and averting a lengthy strike is crucial to Boeing’s effort to repair its battered balance sheet and improve the quality of work in its factories after years of turmoil. 

The 25% pay boost over four years offered by Boeing is less than the union’s initial 40% demand. However, it stacks up well against other recent labor deals. The company is offering an immediate 11% pay raise that would mean the highest-paid workers make $57.43 an hour. For some labor grades, minimum wages will increase as much as 42.3% when cost-of-living adjustments are included.

The United Auto Workers ended a lengthy strike last year after reaching a deal for a 25% hourly pay raise over a more-than-four-year contract. At Stellantis NV, the top hourly wage will exceed $42 an hour by 2028. At Spirit AeroSystems Holdings Inc., workers got a 23.5% pay boost over four years.

Boeing’s offer also eliminates a controversial bonus for IAM members that was tied to internal measures for productivity, quality and safety. Workers are furious at the change, even though they were frustrated at times with the formula that could be skewed by supplier miscues.

Holden acknowledged that his team had focused on guaranteed wages since members considered it a top priority in meetings over the past two years. “I do understand the frustration in not having annual bonuses,” he added.

Strike Preparations

Members of the International Association of Machinists and Aerospace Workers will vote Thursday on whether to accept the deal, and whether to strike. If Boeing’s offer is rejected and two-thirds support the work stoppage, then employees will walk off the job at 12:01 a.m. on Friday.

“Because they haven’t had a contract negotiation since 2008, the expectations would be high,” said Leon Grunberg, a long-time observer of Boeing labor relations and professor emeritus of sociology at the University of Puget Sound. “But Boeing’s in such a vulnerable place right now that this is probably as generous as they could be.”

From northern California to Idaho, strike preparations are under way, with IAM members making signs along with “burn barrels” to warm picket lines. In online forums, hundreds of employees vented their rage, often in harsh terms, at a deal they say doesn’t do enough to improve their financial standing. 

Leaflets distributed around Boeing’s Everett factory on Monday urged workers to reject “Boeing’s Bad Deal” and to approve authorizing a strike when they vote on Thursday. It demanded the union fight for a 40% wage increase, board seat and pensions.

“Stand strong,” said a handout viewed by Bloomberg. “We deserve a fair deal.”

Holden acknowledged the union got a lot, but not all that it had sought in bargaining the first comprehensive deal in 16 years. But he said he ultimately decided to recommend that members accept Boeing’s offer because he can’t guarantee that a strike would produce a better deal.

“It’s irresponsible to ask people to strike for something I’m unsure we can accomplish,” Holden said. “You have to think of the weight of 33,000 families.”

Ortberg’s Role

Ortberg, who took over as Boeing CEO in early August, has vowed to return focus to the planemaker’s manufacturing roots, after a midair blowout on one of its jets early this year threw a spotlight on its manufacturing and safety record. The new chief had largely stayed out of the contract talks, which kicked off in early March and intensified over the past month when the two sides were holed up in a Seattle hotel.

But he came in for a short meeting on Saturday, weighing in on “job security,” a contentious issue with union leaders pressing Boeing to commit to building its next new plane in the Puget Sound region.

“He did give a commitment on job security,” Holden said. “Then we have work to do to make it worth something.”