Boeing’s largest employee union, the International Association of Machinists and Aerospace Workers (IAM) District 751, overwhelmingly voted on Wednesday to authorize a strike. This move increases the pressure on Boeing to meet the union’s demands for higher wages and better working conditions, as it faces the possibility of a crippling walkout later this year.
The union’s vote passed with an astounding 99.9% approval, signaling the determination of the union members to take action if their demands are not met. The vote introduces an additional layer of uncertainty for Boeing, which has been grappling with a series of crises that have affected its reputation over the past year. IAM District 751 President Jon Holden stated after the vote, “We don’t want to strike — but we’re ready and willing to do so to bring home the best aerospace contract our members have ever seen. There is no Boeing without us, and we have what it takes to build this company back to the level it was.”
Negotiations between Boeing and the 32,000-member union began in March, aiming to replace the current agreement, which expires on September 12. A strike in September would require another membership vote. The union’s proposal includes a significant pay increase of more than 40% and the restoration of the traditional pension program that was eliminated in 2014. While pay and benefits are crucial, Holden emphasized that one of the union’s top priorities is ensuring that Boeing’s next new airplane is built in Washington state, reflecting a broader concern for job security and local economic impact.
Boeing has faced multiple investigations and controversies over safety and manufacturing integrity throughout the year. In January, an Alaska Airlines 737 Max experienced a midair door panel blowout, forcing an emergency landing. More recently, Boeing agreed to plead guilty to a charge of conspiracy to defraud the government over crashes of 737 Max jets in Indonesia in 2018 and Ethiopia in 2019 that resulted in 346 fatalities. The agreement with the Justice Department followed findings that Boeing had failed to adhere to the terms of a 2021 deal intended to shield it from criminal prosecution. These issues have compounded Boeing’s challenges, making the stakes in the current labor negotiations particularly high.
This round of negotiations occurs against a backdrop of significant labor victories in the aviation industry. Last summer, American Airlines pilots secured a 46% raise, and flight attendants at Southwest Airlines recently approved a deal that gives them a more than 20% raise. Additionally, IAM members at Spirit AeroSystems, a key supplier recently reacquired by Boeing, walked off their jobs for six days but ultimately won a 23.5% pay raise over the life of their contract and other concessions, including the elimination of mandatory overtime on weekends. These successes have set a precedent and raised expectations among IAM members at Boeing.
Stewart Glickman, deputy director of equity research at CFRA, sees two possible paths for Boeing: it can agree to the union’s demands to avoid a strike, which would increase financial strain, or it can take a hardline approach, risking a strike and further disruption to production. A strike by machinists would significantly impact Boeing’s ability to meet production targets, particularly for the 737 Max and 777 aircraft. Wall Street analysts estimate that during the 2008 strike, which shut down production for two months, Boeing lost more than $2 billion in profits. Some suppliers were forced to lay off workers and slow down operations.
Richard Aboulafia, managing director at AeroDynamic Advisory, emphasized that Boeing’s labor negotiations could further erode its credibility if not handled properly. He stressed the importance of reaching a fair agreement to maintain trust with customers, regulators, suppliers, and the broader industry.
The last major contract negotiation between Boeing and the union in 2008 ended with a two-month strike. Subsequent negotiations in 2011 and 2013 led to concessions from union members in exchange for keeping airplane production in Washington. Boeing expressed confidence in reaching a balanced deal that meets the needs of both employees and the company, with Stephanie Pope, head of Boeing’s commercial airplanes, highlighting the constructive nature of recent meetings. Pope noted, “We are aligned and engaged in what we want the future of this company to look like. I am very encouraged for the opportunity to make that happen.”
The union has demonstrated its resolve through rallies and other actions, including a large pre-vote rally at T-Mobile Park in Seattle. Thousands of members attended, holding signs that read, “WE DESERVE MORE 2024” and “MORE $$.” Holden underscored the importance of leveraging the existing infrastructure in Washington for future airplane production, citing the established supply chain, higher education institutions, and technical colleges that support the aerospace industry.
The outcome of these negotiations will be critical for Boeing as it navigates its recovery and seeks to stabilize its operations amid ongoing challenges and heightened labor demands. The company’s ability to reach a fair and balanced agreement with the union will play a significant role in determining its future trajectory, both in terms of production capacity and maintaining its standing in the industry.