Basking in Farnborough rebound, Boeing faces contract rejection at Defense unit

By Scott Hamilton

July 20, 2022, © Leeham News: While Boeing is basking in an upbeat Farnborough Air Show with sizable orders for the 737 MAX, it faces the prospect of losing a key contract vote on July 24 with the International Association of Machinists Local 837.

Local 837 represents Boeing workers in St. Louis (MO), where the Defense unit is headquartered. Union leadership recommended rejecting the contract, opening the door to a potential strike. Nearly 2,500 union members are eligible to vote on the contract offer from Boeing. The current contract expires at 12:01 AM St. Louis time on July 25.

Strike could begin Aug. 1

“A seven-day waiting period stipulated in the current contract means IAM members would begin picketing on Monday, Aug. 1, if they vote to reject the contract and go on strike. The membership overwhelmingly passed the strike sanction vote on June 25 by 99%,” the union said in a statement posted on its website.

“The IAM bargaining committee cannot, in good conscience, recommend a contract that is not fair and equitable as the company continues to make billions of dollars each year off the backs of hard-working members on the shop floor,” IAM 837 said. Boeing lost billions of dollars since the 737 MAX was grounded, the COVID pandemic, and 787 deliveries were suspended nearly two years ago.

“We are disappointed that the union would reject an offer that would give our employees highly competitive wage increases, as well as cash and stock immediately, in addition to one of the most lucrative 401k plans in the nation. We remain hopeful that our employees will see the value in this offer and vote yes,” Boeing said in a statement.

30 Comments on “Basking in Farnborough rebound, Boeing faces contract rejection at Defense unit

  1. From the link below:

    “But according to reports on Facebook, the Boeing offer included a 5 percent wage increase over three years and a $3,500 signing bonus. Posts on Facebook indicated deep anger and a determination by workers not to accept the further destruction of their living standards. One posted: “They can afford to pay their workers much more than they do. Prepare to strike so you can get a better deal. 5% over 3 years is a joke. It’s actually taking a pay cut. Inflation is up 10% per year. You’ll basically [lose] 25% of the value of your wages… they just asked you to work for 25% less over the next 3 years.”

    “Another wrote, “Topped out tier 1 will get $1.50 raise, $1.16 raise and $1.19 raise. So, for 10 1/2 years (2015 – 2025) Boeing can only afford to give their most valuable, knowledgeable and experience employees who worked through the pandemic…a $3.85 cent raise. What a joke!””

    https://www.wsws.org/en/articles/2022/07/19/kgqh-j19.html

    *****

    So, the dreaded price/wages battle begins — the bane of any economy with high inflation. Not easy for any company, but a disaster for a company with weak finances.

  2. Workers of the world, Unite! You have nothing to lose but your chains.

    There are to many directors and managers, with very high salaries and benefits. The Boeing CEO can cut his own wage and benefits drastically. And all bonus to board members can be cut.

    • That would be nice. And no outsourcing to LCCs (Low Cost Countries.)

  3. Dennis Muilenberg was fired for his pathetic lack of leadership and bowed out with over $60 million and life benefits. Jim McNerney left with over $100 million and then there’s Dave Calhoun and his cronies reaping massive amounts of money and stock options and for what? All three are behind the mad max unethical debacles that have taken place with so many airplane and space program’s. Can anyone explain the justification for what they make for what they’ve done?

    These IAM workers deserve a lot more, they have taken so much abuse, including defunct pension plans that don’t exist anymore all for ….. saving the company money and ‘shareholder value’
    Going on strike is very difficult for the workers involved and their families….. come on Boeing pay up!

    • Boeing doesn’t have the cash to pay up…the company is financially on the edge of the abyss.

      But I certainly agree with your sentiment 👍

      • Thanks Bryce!

        Be careful, you come across sounding like a Boeing executive 😉

        The problems I have is Boeing has the money to pay Sr managers and above massive amounts for salaries, and do write offs for airplane programs that continue to perform poorly, still spend money for stock buybacks and pay shareholder dividends. Oh and they just spent big bucks for the move from Chicago.

        The company has the money!

        • Well, if you add up the cumulative amount paid to those senior managers and spread it out among the general workforce, it won’t represent much of a pay hike per person.

          I agree that the management layer comprises a huge parasitic mass of vastly overpaid leeches, and that it would be justified to strip them of their benefits, but that still won’t raise much money in relative terms.

          • the problem is also one of equity. what is it that a CEO does that is worth 1000 times what a senior technician does? look good in a suit and lie convincingly?

            swap the bodies and I bet the tecnician would be a better CEO than the CEO would be a technician.

            back in the day Ben and Jerry’s ice cream had a corporate bylaw that the highest paid company employee could not make more than 10x the lowest paid employee. that should be baseline law for any public company.

          • All good points and the tragedy involved.

            At the core the issue is not just Boeing but the Corporations in general is that you are rewarded for being there not your performance.

            Ego, the huge management payouts for putting Boeing into the abyss.

            Big surprise when workers strike when it can hurt (in this case Boeing) the most. The best raises I got before I quit was when the company was in bankruptcy! They knew the key people they had to keep to recover.

            Yep, once recovered no more raises.

            And to be clear, I am not anti Boeing, I am anti corporation and Boeing being an aircraft builder (well sometimes) is the one at issue here.

          • “looking good in a suit”

            management participates in the gains from their operations. ( like keeping the lid on workforce expenses 🙂

    • It seems Boeing excutive position have been used to shine, support share value, delay investment, promise the world for a few years and bail out when it gets hot with $50mln at least.

      Boeing executives should explain why they make 5x as much as their Airbus colleagues. Explain to their wives, friends, employees.

      • keeje:

        With all due respect, the sort of remarks about what people should do is an absolute waste. Its never going to happen.

        I don’t know a great deal about the European corporations (you see hints of the issues there as well) but certainly in the US, the corporation are corrupted.

        I don’t know it would solve all the problems but as brought up before, ban share buy backs, dividends only on profits, program accounting all should be banned.

        The Boards are a huge part of this, that gets deep into business Admin and I can see the issue but I don’t have an answer on how to reform those.
        Calhoun being a classic example of being on the Board and then saying he did not know what was going on. He was paid to know what was going on.

        Its really a variation on Soviet corruption but at the Board level where they keep shoveling money to each other and no accountability.

        • “With all due respect, the sort of remarks about what people should do is an absolute waste. Its never going to happen.”

          The World never changes? Was it the same a hundred years ago, or fifty years ago?

          -> During World War II, Congress introduced payroll withholding and quarterly tax payments. In pursuit of equality (rather than revenue) President Franklin D. Roosevelt proposed a 100% tax on all incomes over $25,000. When Congress did not enact that proposal, Roosevelt issued an executive order attempting to achieve a similar result through a salary cap on certain salaries in connection with contracts between the private sector and the federal government. For tax years 1944 through 1951, the highest marginal tax rate for individuals was 91%, increasing to 92% for 1952 and 1953, and reverting to 91% 1954 through 1963.

          • What’s a little odd is that that commenter took one of this site’s best to task for doing what he himself then proceeded to (try to) do..

            Thanks for FDR’s mention; he knew that capitalism would periodically need to
            be saved from itself. Too bad he allowed his VP Wallace to be replaced by the guy who A-bombed Japan..

            “We’re Number One!”

          • Bill7:

            Well considering my dad was bobbing off the Shores of Okinawa in a Gun Boat which would have lead the invasion wave to Japan, I have a very different take on the A bomb dropping and the million casualties that were estimated to occur (Okinawa being the closest analog to a Main Japan Island invasion.

            You might want to ask the people of China and the rest of Asia how they felt about that war.

            And yea, I had an Uncle that would have been deployed to Japan if the war had not ended.

        • > Its really a variation on Soviet corruption but at the Board level where they keep shoveling money to each other and no accountability. <

          Hunh? What on earth do "Soviets" have to do with corporate corruption in the
          United States? The problem is thoroughly home-grown, with for example
          the Boeing CEO making ca. 5x p.a. what his Airbus counterpart makes, despite
          far worse performance..

          "Soviets" ? [shakes head..]

          • Well, the poor quality/reputation of BA’s recent endeavors is reminiscent of the poor reputation of Soviet-era aircraft — perhaps he meant that?

            Anyone’s guess…

          • No.

            The Soviet Government as was noted before is a government lead and supported corruption. One example was the home grown Night Vision Goggles that tens of millions shelled out for and none produced (it all went into Oligarch hands)

            A good estimate of the stolen (not wasted or bloated) money gone in the Soviet Union is 40%.

            US corruption is at the corporate level.

            And no, the government is not corrupt, its not efficient like any bureaucracy and wasted money and bloated spending.

            But then having worked for two huge corporations , one small sized financial institution and a number of small companies, none of them were efficient and well managed was an open question.

            The financial institution the President never left his office. He had no clue what the workers were feeling nor obviously did he care.

            One of his youth cronies was employed despite his complete being a nincompoop and he was “dating” one of the branch managers. As the operation grew he was moved out of a position that needed good people and put into another slot that was just a face.

          • @TW: drop the Soviet Union discussion. It has nothing to do with a union labor contract story.

            Hamilton

  4. I looked and looked, but can see no relationship between the question I asked:
    “What on earth do “Soviets” have to do with corporate corruption in the
    United States? ”
    ..and the unsuppported claims, nonsequiturs, and personal anecdotes (spare us!) with which he responded.

    The question stands, by the way.

  5. >The Soviet Government as was noted before is a government lead and supported corruption. One example was the home grown Night Vision Goggles that tens of millions shelled out for and none produced <

    Trans: please support your claims above with evidence. "as was noted before" is meaningless; mere repetition of an unsupported claim has no evidentiary value.
    The "night vision goggles" anecdote is cute; but again, you'd need to provide that
    pesky stuff called.. evidence.

    • IT is an interesting technique:
      Saturate the place with unsupported, usually invented bytes
      and continue to argue from there _even_ if proven false.

      • Well, I did enjoy that commenter’s “as was noted before..”.
        Sublime stuff.

  6. I guess the other half of the Dynamic Duo got the night [mercifully] off.
    He’s gotta rest up for that report [oddly self-imposed, late last month]
    that’s due soon..

    “Stay Tuned!”

    I like Duke and Trans.. a lot.

  7. LOL, I was curious how this site/commentators would spin a negative this week for Boeing, and it didn’t disappoint. Complete with whining about the US dropping an atom bomb to end WW2 (and save both Japanese/American lives vs. an invasion). LOL again.

    A lot of union members voted for Bidenflation, they can live with the consequences now.

  8. Here is what Boeing offered – https://www.iam837.org/uncategorized/boeing-contract-speedfact-2/ while I am not usually a big supporter of unions I do think that in this case Boeing has been chipping away for years and removing/reducing benefits when they held the stronger position. The reality is these are the folks that build your products and you would think you would want to find common ground and try to do the best for your employees but Boeing with all the GE leadership have decided that employees are just a resource like any other resource and that they can be easily replaced. If you think of all the money that Boeing spent when led by Mcnerney with opening Charleston with the goal to effectively break the union, you really can see over the years what the leadership focus has been and IMHO continues to be. It’s certainly not to do whats best for the employees and the business thats for sure, under the GE leadership its all been about being a profit center, and we can see how that has worked out.

    So in this instance I hope the union is able to get a better offer, these defense folks essentially risked their lives and family by coming into the factory to build planes/weapons when covid shut everything down AND Boeing was not able to delivery 737’s and 787. Defense was one area that they were able to maintain some cash flow, and so this contract shows you how Boeing rewards them, smh. Now before someone says Boeing has a cash flow issue, which is correct, I really doubt that is the hold up, they just do not want to set a precedent for the next negotiation, again SMH…..

  9. What is not being told is the IAM workers in St.louis have not had a pay raise in 8 years! We took concessions on the promise of more work coming to our facilities in our last contract. We deserve more and will fight for it.

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