SEATTLE — Boeing machinists voted to reject the company’s latest contract offer on Wednesday, extending a bruising strike that already has lasted more than 40 days.
The agreement — voted down by 64% of union members — would have meant a significant wage increase for the 33,000 on strike. Instead those workers dealt another blow to Boeing, which came on the same day the company reported a massive $6 billion loss quarterly loss on Wednesday, one of the worst quarters in Boeing's history.
Those disappointing results were partly the result of the work stoppage, which has halted production at Boeing’s factories in the Pacific Northwest.
But Boeing’s problems run deeper than that. Even before the strike, the company was dealing with quality control and production problems across its commercial aviation operations. The company also announced a $2 billion loss in its defense and space business.
“We're clearly at a crossroads,” Boeing CEO Kelly Ortberg said in a conference call with analysts. “We need to reset priorities and create a leaner, more focused organization.”
Ortberg has kept a low profile since taking over as CEO two months ago. That changed on Wednesday, as Ortberg laid out his thinking in a conference call and television interview. He talked about rebuilding Boeing’s culture, putting managers closer to the engineering labs and factory floor.
“The first thing we've got to do is stabilize the business. And obviously, getting through the IAM strike is the first big step in doing that,” Ortberg told CNBC. “It's more important in terms of our long term. Getting back to building airplanes, delivering good airplanes.”
Union members overwhelmingly rejected the company’s first contract offer more than five weeks ago.
Boeing then proposed a second deal, which it presented as its “best and final offer.” But the company infuriated union members by releasing the offer directly to the media instead of negotiating in private. The union rejected that offer without voting on it.
The union credits acting U.S. Labor Secretary Julie Su with helping restart stalled negotiations, leading to the agreement that union members ultimately voted on Wednesday.
That contract included a 35% wage hike — a significant increase from Boeing’s initial offer of 25%, though still short of the 40% raise the union initially wanted. The company also pledged to increase its contributions to employee 401k retirement funds.
There was one key union demand where Boeing refused to budge: the pension plan. Union members made very clear that they want to reinstate the defined benefit pension plan they lost a decade ago.
The last time Boeing machinists went on strike in 2008, the work stoppage lasted for close to eight weeks, costing the company an estimated $2 billion. The economic damage this time may be even larger.
KUOW's Casey Martin contributed reporting from Seattle, and Joel Rose reported from Washington, D.C.
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