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Boeing Machinists Reject New Contract, Prolonging Strike and Deepening Company's Woes
In a significant blow to Boeing, the company's machinists have voted to reject the latest labor contract proposal, extending a strike that has already lasted over 40 days. This decision comes at a critical juncture for Boeing, which is grappling with multiple challenges, including severe financial losses and ongoing production disruptions.
The contract, which was rejected by 64% of the union members, offered substantial benefits, including a cumulative salary increase of nearly 40% over four years, a $7,000 ratification bonus, and enhanced company contributions to retirement plans.
Despite these attractive terms, the union's primary concern was the lack of a defined-benefit pension plan, which was frozen a decade ago. This issue has been a longstanding point of contention for the workers, many of whom feel that the current retirement benefits do not provide the same economic security as the previous pension plan.
The strike, initiated on September 13, has halted production of some of Boeing's top-selling planes, including the 737, and has led to furloughs and layoff announcements for thousands of workers. The 787 Dreamliner, manufactured at a nonunion factory in South Carolina, remains the only major Boeing jet still in production during this period.
Boeing's financial situation has been severely impacted by the strike. On the same day the contract was rejected, the company announced a staggering $6 billion loss for the third quarter, one of the most significant quarterly losses in its history. These financial woes are compounded by issues related to quality control and production in the commercial aviation sector, as well as a $2 billion loss in the defense division.
The company's new CEO, Kelly Ortberg, who took the helm two months ago, faces the daunting task of stabilizing the business. Ortberg has emphasized the need to revitalize Boeing's corporate culture and improve the proximity of managers to engineering teams and the factory floor. He has also announced significant job cuts, affecting 10% of the company's workforce, or 17,000 employees.
The intervention of acting U.S. Labor Secretary Julie Su was crucial in reviving stalled negotiations between Boeing and the International Association of Machinists and Aerospace Workers (IAMAW). However, despite this effort, the contract failed to meet the union's key demands, leading to its rejection.
Boeing's struggles extend beyond the strike. The company is still recovering from a safety crisis triggered by a panel falling off a 737 Max aircraft during an Alaska Airlines flight in January. This incident has revived concerns about the safety and quality of Boeing's products and led to increased inspections, enhanced training, and streamlined procedures.
The ongoing strike and Boeing's broader challenges have significant implications for the U.S. economy, given the company's role as a major manufacturer and exporter. The situation also affects Boeing's suppliers, such as Spirit AeroSystems, which has announced plans to furlough around 700 workers due to the production halt.
As the strike continues, Boeing and the IAMAW will need to return to the negotiating table to find a resolution that addresses the union's concerns and stabilizes the company's operations. The outcome will be crucial not only for Boeing's future but also for the thousands of workers and the broader economic landscape.
Original Article: https://www.cnbc.com/2024/10/24/boeing-machinists-new-labor-contract-strike.html
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