Boeing workers resoundingly reject new contract and extend strike

Seattle: Boeing's largest union rejected a tentative labor contract Wednesday by a wide margin, extending a damaging strike and adding to the mounting financial problems facing the company, which hours earlier had reported a $6.1 billion loss.

The contract, the second that workers have voted down, was opposed by 64 per cent of those voting, according to the union, the International Association of Machinists and Aerospace Workers. The union represents about 33,000 workers, but it did not disclose how many voted Wednesday.

"There's much more work to do. We will push to get back to the table, we will push for the members' demands as quickly as we can," said Jon Holden, president of District 751 of the union, which represents the vast majority of the workers and has led in the talks. He delivered that message at the union's Seattle headquarters to a room of members chanting, "Fight, fight."

The vote is a setback for Boeing's new CEO, Kelly Ortberg, who is trying to restore the company's reputation and business with a strategy he described in detail earlier Wednesday. In remarks to workers and investors, Ortberg said Boeing needed to undergo "fundamental culture change" to stabilize the business and to improve execution.

"Our leaders, from me on down, need to be closely integrated with our business and the people who are doing the design and production of our products," he said. "We need to be on the factory floors, in the back shops and in our engineering labs. We need to know what's going on, not only with our products, but with our people."

Ortberg delivered that message alongside the company's quarterly financial results, which included the loss of more than $6.1 billion. This month, Boeing also announced plans to cut its workforce by about 10 per cent, which amounts to 17,000 jobs. The company also recently disclosed plans to raise as much as $25 billion by selling debt or stock over the next three years as it tries to avoid a damaging downgrade to its credit rating. The strike is costing the company tens of millions of dollars each day, according to various estimates.

The negotiations have been contentious. The strike began September 13 after 95 per cent of workers voting rejected an earlier contract offer that had been backed by union leaders and Boeing. Later that month, the company made what it described as its "best and final" offer.

The company gave workers just days to approve or reject it, but leaders of the union never put it to a vote. Boeing eventually rescinded the offer, with talks breaking down this month.

The two sides arrived at the now-rejected deal only after the Biden administration got involved. Senior administration officials had been working closely with Boeing and the union in recent months, at President Joe Biden's direction.

Last week, Julie Su, the acting labor secretary, flew to Seattle to meet with company executives and union officials. On Wednesday, Holden said he planned to ask the White House to continue to try to help the parties find a resolution.

Boeing is important to the United States as an economic engine and as a symbol of manufacturing prowess. It employs almost 150,000 people across the country -- nearly half in Washington state -- and is one of the nation's largest exporters. The company also makes military jets, rockets, spacecraft and Air Force One.

Under the contract, workers would have received cumulative raises of nearly 40 per cent over four years, a significant increase over the rejected offer and approaching what the union initially sought. The offer included a $7,000 one-time bonus and additional contributions to retirement plans. It also would have preserved an incentive bonus program that the initial rejected offer would have replaced.

Boeing machinists make about $75,000 in average annual pay. Over the last decade, the workers have seen raises under the union contract of 8 per cent and more than $4 an hour in additional cost-of-living adjustments, according to the company. Consumer prices in the Seattle area have risen more than 40 per cent over the past decade, according to federal data.

But the contract did not revive a defined-benefit pension plan that was frozen a decade ago -- an important priority for many union members. Many workers have been furious over that loss for years, and some have said that they felt Boeing had bullied them into agreeing to the freezing of the pension. Workers have also been angry with the leadership of the union's parent organization, which they say scheduled the vote in a way that supported approval of the offer, prompting a rule change that limited the authority to schedule votes to local union chapters.

"There's some deep wounds," Holden told reporters after announcing the vote results. Holden also said the union may explore what he called hybrid defined-benefit programs in negotiations.

On Wednesday afternoon, union members streamed in and out of the Angel of the Winds Arena in Everett, Washington, one of the voting locations and a short drive from a large Boeing factory. A handful held signs and handed out flyers urging others to reject the offer.

In interviews, several said they voted against the offer because they believed the union could hold out for better terms on wages, retirement, health coverage and other benefits. Many said they were frustrated over the lost pension, even if the odds of getting it restored remain in doubt.

"How do they expect to have anybody stay at the company if they don't have some kind of a pension plan or better investments?" said Darryl Shore, who has worked at Boeing in different roles since 1989.

Shore said that he grew up in the area and both his parents worked at Boeing, but that jobs at the company today don't hold the same economic promise they did back then.

The rejection of the new contract comes as Boeing is trying to recover from a crisis that began when a panel fell off a 737 Max jet during an Alaska Airlines flight in January, reigniting concerns about the quality and safety of Boeing's planes. Five years earlier, two fatal Max crashes led regulators worldwide to ground the plane for nearly two years.

After the January episode, the Federal Aviation Administration limited production of the Max, Boeing's bestselling plane. The company has since increased inspections, added training for new hires, started to simplify procedures and limited tasks performed out of sequence.

The contract's defeat is also bad news for the manufacturer's many suppliers. Spirit AeroSystems, which makes the body of the 737 Max and has agreed to sell itself to Boeing, recently announced plans to furlough about 700 employees, starting next week, because of the strike.

The contract being negotiated would replace one that was agreed to in 2008 and extended multiple times. That offer came together only after a two-month strike that led to a decline of more than $6 billion in revenue and a delay in delivering more than 100 airplanes that year, Boeing said at the time.