EVERETT, Wash. (AP) — Boeing factory workers voted Wednesday to reject the company’s latest contract offer and to continue a six-week strike that has halted production of the aerospace giant’s bestselling jetliners.
Local union leaders in Seattle said the proposal fell short of the majority of support needed from members of the International Association of Machinists and Aerospace Workers who cast ballots on Wednesday.
The offer included pay raises of 35% over four years. The version that union members rejected when they voted to strike last month featured a 25% increase over four years.
The union, which initially demanded 40% pay boosts over three years, said the annual raises in the revised offer would total 39.8%, when compounded.
Boeing workers told Associated Press reporters that a sticking point was the company’s refusal to restore a traditional pension plan that was axed a decade ago.
The labor standoff comes during an already challenging year for Boeing, which became the focus of multiple federal investigations after a door panel blew off a 737 Max plane during an Alaska Airlines flight in January.
Boeing factory workers were voting Wednesday whether to accept a contract offer that includes big pay raises but lacks a traditional pension plan, or to continue a strike that has crippled the company’s airplane production for nearly six weeks.
Voting began just hours after Boeing reported losing $6.2 billion in the third quarter, largely because of huge write-downs in both its aircraft and defense businesses.
Members of the International Association of Machinists and Aerospace Workers voted at union halls in Washington state, Oregon and California on a Boeing offer that would raise wages by 35% over four years, pay a one-time ratification bonus of $7,000 per worker, and restore annual productivity bonuses worth several thousand dollars apiece.
Before the doors opened at a hall near Boeing’s factory in Renton, Washington, workers joined a snaking line outside, where there were scattered calls to keep the strike going.
“It’s going to be a split vote,” predicted Brian Hatcher, who has worked at Boeing for 15 years and said he voted to reject the offer mostly because it would not bring back pensions that were frozen a decade ago.
Theresa Pound, a 16-year Boeing veteran, also voted against the deal. She said the health plan has gotten worse, with higher premiums and more out-of-pocket expenses, and her expected pension benefits would not be enough, even when combined with a 401(k) retirement account.
“I have put more time in this place than I was ever required to. I have literally blood, sweat and tears from working at this company,” the 37-year-old said. “I’m looking at working until I’m 70 because I have this possibility that I might not get to retire based on what’s happening in the market.”
Frederic Scholter, a flight-line inspector who has spent 48 years at Boeing and been through six strikes, voted yes.
“I think if Boeing is giving us good money to invest on our own, it’s up to you to plan your retirement that way,” he said. “It was not a good contract at first. I think this contract meets us halfway.”
The union said it expected to announce the outcome of the vote Wednesday night. Union leaders, who were burned last month when they supported an earlier offer that members voted 94.6% to reject, did not endorse the latest proposal but said it merited consideration.
If the contract is approved, the 33,000 Boeing employees on strike would return to work between Friday and Oct. 31.
The strike, which began Sept. 13, has served as an early test for Boeing CEO Kelly Ortberg, who became chief executive in August.
In his first remarks to investors, Ortberg said Wednesday that Boeing needs “a fundamental culture change,” and he laid out his plan to revive the aerospace giant after years of heavy losses and damage to its reputation.
Ortberg repeated in a message to employees and on the earnings call that he wants to “reset” management’s relationship with labor “so we don’t become so disconnected in the future.” He said company leaders need to spend more time on factory floors to know what is going on and “prevent the festering of issues and work better together to identify, fix, and understand root cause.”
Ortberg, a Boeing outsider who previously ran Rockwell Collins, a maker of avionics and flight controls for airline and military planes, said Boeing is at a crossroads.
“The trust in our company has eroded. We’re saddled with too much debt. We’ve had serious lapses in our performance across the company, which have disappointed many of our customers,” he said.
But Ortberg also highlighted the company’s strengths, including a backlog of airplane orders valued at a half-trillion dollars.
“It will take time to return Boeing to its former legacy, but with the right focus and culture, we can be an iconic company and aerospace leader once again,” he said.
In recent weeks, Ortberg announced large-scale layoffs — about 17,000 people — and a plan to raise enough cash to avoid a bankruptcy filing.
Boeing hasn’t had a profitable year since 2018, and Wednesday’s numbers represented the second-worst quarter in the manufacturer’s history. Boeing lost $6.17 billion in the period ended Sept. 30, with an adjusted loss of $10.44 per share. Analysts polled by Zacks Investment Research had expected a loss of $10.34 per share.
Revenue totaled $17.84 billion, matching Wall Street estimates.
The company burned nearly $2 billion in cash, in the quarter, weakening its balance sheet, which is loaded down with $58 billion in debt. Chief Financial Officer Brian West said the company will not generate positive cash flow until the second half of next year.
Shares of The Boeing Co. fell 2% in regular trading Wednesday.
Boeing’s fortunes soured after two of its 737 Max jetliners crashed in October 2018 and March 2019, killing 346 people. Safety concerns were renewed this January, when a panel blew off a Max during an Alaska Airlines flight.
Ortberg needs to convince federal regulators that Boeing is fixing its safety culture and is ready to boost production of the 737 Max — a crucial step to bring in much-needed cash. That can’t happen, however, until the striking workers return to their jobs.
Boeing has held firm in resisting a union demand to restore a traditional pension plan that was frozen in 2014. However, workers who were covered by that plan would get a slight increase in their monthly pension payouts under the latest offer.
“The pension should have been the top priority. We all said that was our top priority, along with wage,” said Larry Best, a customer-quality coordinator with 38 years at Boeing, on a picket line Tuesday outside a Boeing factory in Everett, Washington. “Now is the prime opportunity in a prime time to get our pension back, and we all need to stay out and dig our heels in.”
Lindsey Wasson in Everett, Washington, contributed to this report. Koenig reported from Dallas.
