Employees represented by International Association of Machinists and Aerospace Workers voted in favor of a new contract after a 53 day strike that stopped Boeing Co. jetliner production.
The vote, which was overwhelmingly in favor of ending the strike, allows approximately 33,000 Boeing employees in Washington, Oregon and California to begin returning to work as soon as this Wednesday.
This development follows the workers’ rejection of a revised proposal last month.
This agreement, which was approved by the unions and their members, includes an increase of 38% in wages over four years as well as increased retirement contributions.
Jon Holden, President of IAM 751 District said: “This was an important moment for the union tonight.” Holden noted that more than 26,000 IAM members voted, and a large portion of them opted for the contract.
Workers and Leadership win victory
The resolution of the Boeing strike is a significant step for Kelly Ortberg.
In his first three months in this role, Ortberg navigated a turbulent time shaped by an accident that occurred earlier in the calendar year. This incident shook Boeing’s schedule of production and brought its safety standards to light.
Ortberg expressed his appreciation for the collaboration and optimism: “While these past months were difficult for us all, we all belong to the same team,” said Ortberg. We will not move forward unless we listen and work together.
Ortberg, who has been under intense scrutiny for Boeing’s labor relations approach, now has the opportunity to restore trust within the organization and to reset its culture.
The strike highlighted long-standing complaints among workers. These included low wages growth linked to an old contract, which union leaders claimed limited their bargaining strength.
Although contentious, the recent IAM deal reflects both a company’s and its employees commitment to moving forward following a period unprecedented stress.
Boeing’s financial implications
Boeing suffered a significant financial loss as a result of its 53-day strike. Some analysts estimate that the company lost around $100 million in revenue per day.
Boeing’s performance is under pressure due to the disruption and to raising $24 billion to prevent a downgrade in credit rating.
Sheila Kahyaoglu, an analyst at Jefferies, estimates that Boeing’s salary costs will increase by approximately $1 billion over the course of the four-year agreement. The signing bonus amounting to $396 million is the estimate from Sheila Kahyaoglu.
The strike highlighted the immense pressure Ortberg is under to control costs and meet the needs of an employee base that wants better benefits and wages.
Boeing CEO: What next?
Boeing will need to ramp up production for several weeks and stabilize cash flow, as the 737 MAX’s output is still below the target. Its monthly output should remain in single-digits.
Boeing is expected to resume production and help complete a backlog that includes over 6,000 aircraft.
Boeing aims at gradually increasing the production of its 737 MAX aircraft, but it still falls short of the target set before the strike of 38 planes per monthly.
Boeing has warned that, although the International Association of Machinists and Aerospace Workers confirmed on Tuesday that workers can resume work as of Wednesday morning, some employees may require retraining due to the prolonged time off.
Kelly Ortberg, the CEO of the company, is now also responsible for repairing relations with longstanding machinists that have expressed frustration about stagnant wages.
IAM President Jon Holden said that despite 59% voting to approve the contract there were still some divisions. “There were definitely those who were not satisfied with the vote.”
By the fourth year of the new contract, the average wage for machinists will rise to $119 309 from $75.608.
Analysts are cautious in their outlook for the near future, especially as the production and supply chain is still recuperating from the extended shutdown.
Boeing’s financial situation will be stabilized and its demand met with the return of workers, but it is still uncertain whether or not Boeing can fully recover.
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