Boeing Co.’s largest union rejects another labor contract amid the company’s continuous cash losses, further extending the strike. The proposed contract would have increased wages by 35% over the next four years, but 64% voted nay. The International Association of Machinists and Aerospace Workers remains headstrong in a fight for pensions. Members are citing the previous contract in 2014 that took this benefit away from workers.
“This contract struggle began over ten years ago when the company overreached and created a wound that may never heal for many members,” Jon Holden, IAM District 751 president, said.
The union’s preference for pensions as a path to long-term wealth led it to disapprove of alternative wealth-building options, including additional benefits to employee 401(k) plans. The new contract includes an 8% contribution of pay, an automatic contribution by the company of 4%, and a one-time $5,000 stipend. Employees’ push for pension restoration is unusual, as pension plans have become less common recently due to uncertainty around employers’ ability to guarantee future benefits for retirees.
“Some younger workers like working with the market and like investing, whereas many of the older workers, who switched from defined benefit and are used to that, are pissed off by that switch,” Harry C. Katz, a labor-relations professor at Cornell University, told Bloomberg. The resistance of the union continues to put pressure on Boeing’s declining financial condition. On the day of the vote, Boeing released its third-quarter financials, where the firm reported $6.2 billion in losses over the last three months.
To combat these losses, the firm announced it would lay off 17,000 employees. “We will be relentless in changing the Boeing culture through action, not just words on a page,” CEO Kelly Ortberg said in a message shared with all employees. Boeing also adopted a $10 billion credit agreement and showed a willingness to raise capital in the near future.
These plans come after previous warnings from Fitch Ratings, Moody’s, and S&P Ratings of credit rating downgrades. This threatened to make access to capital much harder for Boeing by forcing it to settle for higher borrowing costs. Although Ortberg has taken proactive steps to lay the framework for financial reconstruction, he contends that it will be a long time until Boeing reaches its past status.
“This is a big ship that will take some time to turn, but when it does it has the capacity to be great again,” Ortberg said.
