By Niraj Chokshi
Boeing and its largest union appear to be digging in for a long fight — even as some striking workers start to look for temporary jobs and the company risks having its credit rating downgraded to junk status.
Nearly a month into the strike, negotiations between Boeing and the union resumed this week under federal mediation after a long break. But they collapsed Tuesday, with the company withdrawing its latest offer. The two sides traded blame for the breakdown.
In a message to employees, Stephanie Pope, CEO of Boeing’s commercial airplane unit, said the union had made “demands far in excess of what can be accepted if we are to remain competitive as a business.”
The union accused Boeing of being “hellbent” on sticking to the offer that labor leaders had previously rejected for being insufficient to garner the support of most of its more than 33,000 members.
A long strike is the last thing Boeing needs. The company, which hasn’t reported a full-year profit since 2018, is now losing tens of millions of dollars more every day that striking workers are not building planes. The work stoppage also comes as Boeing is trying to persuade regulators to let it produce more 737 Max jets, its bestselling plane. And Tuesday, S&P Global Ratings said it was considering lowering the company’s credit rating, which sits just above junk status, depending on the strike’s length.
The walkout, which began Sept. 13, is also difficult for workers, many of whom are living off savings and have had to find health coverage after Boeing dropped them from its plan this month.
But in interviews and online forums, many workers said they were prepared to wait for a better deal after growing frustrated by wages that failed to keep pace with rising costs and concessions that they made in previous contracts. They have also drawn inspiration from the gains that unions in other industries have secured for their members.
“The union membership is really unified right now,” said Rob Tompkins, a quality assurance inspector on the 777X plane in Everett, Washington. “I’m ready to stay out until January if need be.”
The strike began in mid-September after workers overwhelmingly rejected a four-year tentative contract negotiated by union leaders and company executives. Boeing made the now-withdrawn proposal days later, offering a 30% raise and other improved benefits, but the union and its members said the deal didn’t go far enough.
A survey of thousands of members at the time found that a vast majority were not interested in the offer, Jon Holden, the leader of District 751 of the Machinists union, which represents nearly all of the striking workers, said in an interview.
“The reality is it didn’t meet what our members were looking for,” he said. “We were never going to vote that offer.”
Consumer prices in the Seattle area have risen more than 40% over the past decade, according to federal data. The region’s thriving tech industry, which includes Amazon and Microsoft, has contributed to fast-rising home prices, which have more than doubled over that same period, according to the Case-Shiller index.
Boeing machinists make about $75,000 in average annual pay, which includes 8% in contractual raises over the past decade and more than $4 an hour in additional cost-of-living adjustments over the same period, according to the company. The union is seeking a 40% wage increase in a new contract.
“Real estate is the key cost that has just exploded here,” said Thomas Gilbert, a professor of finance and economics at the University of Washington’s Foster School of Business in Seattle. “If wages only increase at 2% a year or 3% a year compared to real estate, it simply has not kept up at all.”
Under Boeing’s most recent offer, starting pay for union members, most of whom work in the Seattle suburbs, would have risen to $20 an hour, and the average machinist would have earned more than $111,000 annually by the end of the four-year contract, according to the company. That would have put starting pay at around Seattle’s minimum wage, which is slated to rise to $20.76 in January.
Many Boeing workers are also seeking changes to a 2014 deal in which the union’s members accepted a contract that froze their pension plan in exchange for a promise by Boeing to keep production of the 777X in the Seattle area.
Boeing was publicly searching for a different place to make the plane, which is designed for international flights. Washington state ultimately approved $8.7 billion in subsidies to encourage the company to keep the work in the Seattle area.
Several workers said they felt that Boeing had bullied the union into that deal, even as the company earned record profits. They also expressed frustration with their union’s international leadership for forcing a vote early in January when some more senior workers would have been on vacation. Union members approved the deal by a 51%-to-49% margin.
“I think the company vastly underestimated how upset the membership was from the 2014 contract extension,” said Andrew DeFreese, a heavy equipment operator at Boeing’s Everett plant. “We have been talking about that ever since it happened.”
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