To strike or not? Boeing machinists consider new contract offer

33 thousand workers who build Boeing airplanes on the west coast will vote this week to either accept or reject a new tentative deal reached over the weekend. The current contract expires on Thursday. The International Association of Machinists [IAM] have said they might strike if no deal is reached.

A lot is riding on it, as Boeing struggles to rebuild its reputation after two fatal crashes and multiple quality control issues. Aviation industry analyst Scott Hamilton spoke with KUOW’s Kim Malcolm about the offer.

This interview has been edited for clarity.

Kim Malcolm: What are some big-ticket items that Boeing agreed to in this offer?

Scott Hamilton: The IAM asked for a 40% wage hike over the life of the contract, four years; recapture of health and pension benefits; and they, among other things, want to guarantee that the next Boeing airplane, whatever it is, will be built in the Puget Sound area.

So that's what the union asked for. What did Boeing actually agree to?

They didn't get the 40%, except in some limited job category levels, but they did get more than 20%. Boeing is offering a $3,000 signing bonus and more than $4,000 guaranteed contribution to the pension plan. And they did guarantee that, at least through the life of this contract, the next Boeing airplane will be built locally.

That local build of a new jet, if it happens in the next four years, how significant would that be to the union?

That would be huge.

Boeing, under Jim McNerney, threatened to move production of the Max in 2011 out of Renton, if the union didn't give concessions at that time and extend a contract with a no strike provision. They repeated that in 2013 for the 777X. The union reluctantly approved both of those issues.

And in 2009 Boeing established a second production line of the 787 in Charleston, South Carolina, and ultimately, during the Covid period, closed down the 787 line in Everett. So, guaranteeing a new airplane in the Puget Sound area, and Portland, is a huge deal for the union.

It's more than fair to say that Boeing is in a different place now than it was 16 years ago when it negotiated the last contract with the union. How successful would you say the union was in getting what they wanted this time?

Well, it's my opinion that the union won more than it didn't win. I know that there's a segment of the membership that's already been very vocal in thinking this is a bad deal. I don't agree. In any contract negotiation, typically both sides give up something to reach an agreement, and I think that's where you are today.

Boeing has a new CEO, Kelly Ortberg. I understand getting a new deal was very high on his list. What would this deal mean for the company?

If a strike is avoided, that is a huge benefit for the company. They still are struggling to get their cash flow back into positive territory. A strike would only exacerbate a negative cash flow. And of course, the customers want their airplanes, and if you have a strike, they don't get their airplanes.

What happens if the workers vote to reject this deal later this week?

On Thursday, there are two things that'll be up for vote. One is to accept or reject the contract, and the other is — if the contract is rejected — whether to go on strike or not. The accept or reject of the contract is a 50% plus one vote. To go on strike requires a two-thirds majority. If the contract is rejected, and two-thirds majority votes to go on strike, well then, we have a strike. On the other hand, if the contract is rejected and the vote to strike is less than two-thirds, even by a single vote, then the strike does not happen, and the contract is adopted, regardless of whether it was accepted or rejected in the companion vote.

Let's say there was a strike. How long could that last, and what would it mean for the economy here in the Seattle area?

The last strike in 2008 was 57 days. Boeing internally had made plans that if they went on strike, it could be anywhere from two weeks to 12 weeks. There's consensus that it would be at least a month, if not longer, but that's just everybody's best guess. And of course, what it would mean for the local economy is that Boeing workers have less money to spend at the grocery store. Supply chain workers will be affected adversely, therefore, their spending would probably go down as well. It's a dollar in, a dollar out, very simply put.

You've been watching Boeing and its workers the industry for quite some time now. How would you describe this period right now for Boeing, and what its future could be?

The last several years, since 2019, has just been atrocious for Boeing and at this point it's still atrocious. As far as the future is concerned, it's going to depend in large part on what happens with this contract. But that's just the tip of the iceberg. There's so much that Boeing has to fix and that the new CEO has to fix. It's going to take years for Boeing to straighten out its future.

Listen to the interview by clicking the play button above.