Is this the deal to end Boeing’s crippling 7-week strike?

By Chris Isidore and Vanessa Yurkevich, CNN

New York (CNN) — More than 30,000 Boeing workers will vote again Monday on whether or not to end a crippling seven-week strike. The result of that vote will have significant implications not just for them, but for the company, global travel and the broader economy.

The deal is not significantly different from an offer rejected by nearly two-thirds of membership just over a week ago.

The International Association of Machinists union’s strike has been the most costly American strike of the 21st century, at $11.5 billion and counting. But the vote’s outcome is uncertain, despite a push from union leadership urging members to accept the offer this time around.

The strike has affected not just Boeing, adding to the billions it’s already been losing, but it’s also affecting airlines that are not getting promised deliveries of new, more efficient planes, as well as Boeing’s supplier base spread across all 50 states.

Boeing, despite its problems, remains a major force in the US economy. The Labor Department’s latest monthly employment report showed that 44,000 jobs were impacted in October, counting not just the 33,000 strikers, but workers at Boeing and its suppliers who aren’t on strike but have been temporarily laid off as the strike halts commercial aircraft manufacturing at the aviation giant entirely.

What’s in the deal

The offer would give members an immediate 13% pay raise, followed by 9% raises each of the next two years and 7% the final year of the 4-year deal. When compounded, that would mean a real raise of more than 43% by the end of 2028.

Boeing said average annual pay for members would reach $119,300 by the end of the contract, up from the average of $75,600 heading into the strike.

It also includes increased contributions to the employees’ 401(k) accounts, and a $12,000 ratification bonus that they can take as cash or have contributed to those retirement accounts.

But it does not restore the pension plans that the union lost in a contract 10 years ago and which has spurred anger among the rank and file in two previous votes. And it’s only a modest increase over the offer they rejected October 23.

Still, union leadership is advising members to accept the offer and “lock in these gains and confidently declare victory.”

“In every negotiation and strike, there is a point where we have extracted everything that we can in bargaining and by withholding our labor,” said the statement from the union to members. “We are at that point now and risk a regressive or lesser offer in the future.”

Union members have rejected offers recommended by their leadership in the past, only to accept a subsequent deal that isn’t much better. That happened in 2021, when members of the United Auto Workers union at farm and construction equipment maker John Deere accepted a deal similar to one they had previously rejected, ending a five-week strike there.

And it happened 10 years ago at Boeing, when about two-thirds of members rejected an offer that ended the pension plan. That was followed by 51% voting to accept roughly the same concession offer rather than deal with Boeing’s threat to build non-union plants around the country, which would potentially cost the jobs of many union members.

One Boeing employee told CNN Friday he intends to still vote no because he thinks the improvements over the previous offer aren’t significant enough to change his mind.

“It’s still not good enough,” said Brandon Felton, who started at Boeing in July. “It doesn’t keep up with (what) we’ve lost (to inflation). A large portion of the 64% that voted no last time are pretty resolute. But it’s probably going to be close. But most of the employees will not be happy, feel appreciated by the company, morale will continue to be low. We don’t see any kind of ‘cultural’ change there at all.”

Loss of pension could kill latest deal

Traditional pension plans, like the one that ended for IAM members at Boeing 10 years ago, are known as a “defined benefit pension” because it pays retirees a set monthly amount as long as they live. Instead, union members now have 401(k) plans, wherein Boeing matches a portion of the contributions that workers make into the account.

That threat 10 years ago of taking away jobs, and the reality of losing the pension plan, is fueling much of the anger at Boeing among the rank and file.

The night the strike started, Jon Holden, president of the largest IAM local at Boeing and the union’s chief negotiator, explained the near-unanimous rejection of a tentative deal that he had referred to as the best ever negotiated at Boeing by saying, “I know that many members haven’t healed from that wound (of losing the pension).” In the wake of the second rejection on October 23, he said the pension was still a major issue in the vote.

“There are many members who won’t vote for an agreement without a defined benefit pension,” Holden told CNN the day after membership rejected the latest offer. “There are others who have moved off it and who are focused on wages. There are others who are saying, ‘If I don’t get the pension, then you’ve got to do more on the match. You can’t stagnate my wages for the last eight years and expect me to pay for my own retirement.’”

But Boeing has made it clear throughout the negotiations that bringing back the pension plan was a non-starter as far as it was concerned.

“There is no scenario where the company reactivates a defined-benefit pension for this or any other population,” the company said in a statement on October 15, and confirmed Thursday is still its positon. “They’re prohibitively expensive and that’s why virtually all private employers have transitioned away from them to defined-contribution plans.”

The union said it did everything it could to improve retirement security for its members in its negotiations. But it still hasn’t become the first American union to restore a lost pension plan.

But retirement plans aren’t the only hurdle to a deal.

Holden said union members are simply angry at Boeing because of the threats to move jobs in the past, and demands for concessions even in good times.

“Those are the issues we’re dealing with within this membership, and they’re justified,” he said.

“You reap what you sow,” Holden added.

What’s at stake

While ending the strike is important to members who have been away from good paying jobs for nearly two months, with only savings and modest strike benefits to fill part of the gap, it’s also important for Boeing, which hasn’t been able to build most of the commercial planes it depends upon for a large part of its revenue. The company has been dealing with massive losses and soaring debt for more than five years and is looking at cutting 10% of its global staff of 171,000 workers in an effort to cut costs.

An estimate puts total economic losses from the strike at $11.6 billion, according to Anderson Economic Group, a Michigan research firm with expertise in estimating the cost of strikes.

Boeing has had severe financial problems for more than five years, since the second fatal crash of its best-selling plane, the 737 Max, in 2019 led to a 20-month grounding. Since then, it has reported nearly $40 billion in core operating losses and it has warned investors that those losses will continue throughout next year no matter how quickly the strike ends.

Boeing workers have lost hundreds of millions in wages, but Boeing itself has lost more than $6.5 billion from the strike, according to the estimate from Anderson.

The strike has also caused problems at Boeing’s 10,000 suppliers, spread across all 50 states. Despite its many problems, Boeing is a major force in America economy, and it is the largest American exporter. Boeing estimates its own annual contribution to America’s economy at $79 billion, supporting 1.6 million jobs directly and indirectly. It has 150,000 US employees, including the strikers.

There have been short-term problems for airlines, too. While they’ve been able to continue to fly the Boeing planes already in their fleets, promised deliveries of new Boeing jets have come to a halt. And that delay comes on top of even more delays they were already putting up with, due to questions about the quality and safety of Boeing jets.

Those problems were worsened by a January incident in which a door plug blew out of an Alaska Airlines jet soon after takeoff, leaving a gaping hole in its fuselage. Investigators discovered Boeing had delivered the plane without the four bolts needed to keep the door plug in place.

Ending the strike is important for Boeing’s new CEO, Kelly Ortberg, who started in the job just five weeks before the strike began. He has said he wants to “reset” the company’s relationship with the union.

“I know the strike has been difficult for you as well as for our customers, suppliers, communities and all who work at Boeing,” Ortberg said in a statement to union members. “It’s time we all come back together and focus on rebuilding the business and delivering the world’s best airplanes. There are a lot of people depending on us. “

And even union boss Holden said he doesn’t blame Ortberg for the strike or members’ anger with the new boss.

“Ortberg isn’t responsible for the last 20 years. But it’s now in his lap,” said Holden. “Now he has to deal with what his predecessors caused. Hopefully we can get there. There’s a lot at stake, not just for Boeing company, for the supply chain, for our members. That certainly isn’t lost on me.”

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