Update 8-3: Contract Approved (St. Louis Machinists vote Wednesday on latest Boeing contract tweaks)

Update, Aug. 3, 2022: The IAM 837 approved the revised Boeing offer for a three year contract. No strike tonight.

By Bryan Corliss

Aug. 2, 2022, © Leeham News: Machinists Union workers at Boeing’s St. Louis-area defense plants will vote on a revised three-year contract offer from the company Wednesday.

Workers on July 24 had rejected a previous offer from the company with a 91% no vote. In addition, 94% of workers voted to strike. The strike was scheduled to start at 12:01 a.m. Monday, but after a marathon weekend bargaining session, the union side agreed to take Boeing’s latest offer to its members in today’s vote.

Negotiators from International Association of Machinists District Lodge 837 had urged their members to reject the company’s previous proposal, saying it did “not equate to a fair and equitable offer.”

As of mid-day Tuesday, the IAM 837 negotiating committee hadn’t issued a public recommendation on the latest offer. However, our read is that it’s doubtful that Boeing has improved its package enough to satisfy Machinists, who are looking for significant improvements in pay and retirement benefits after giving up major concessions in their last contract.


New offer contains about $4,000 more in retirement benefits

Boeing called its latest proposal “a strong competitive offer that we believe addresses our employee’s and the union’s concerns.”

The new offer keeps the pay raises offered in the contract rejected on July 24. It does, however, change amounts for retirement contributions and ratification bonuses.

Boeing is offering to double its total ratification bonus to $8,000, and to give workers the option of taking that as a lump sum bonus (subject to taxes) or depositing it into their 401(k) funds (where it would not be taxed until they withdraw the money after retirement).

As part of that, Boeing is withdrawing its previous offer to match workers’ 401(k) contributions dollar-for-dollar up to 10% of their paychecks, and to make retirement-fund contributions equal to 2% of worker’s pay in 2023 and 2024.

Instead, Boeing will continue its previous 401(k) match: matching worker contributions 75% on the first 8% of pay that they put into their retirement accounts, as well as contributing an amount equal to 4% for each year of the contract.

Workers told the Riverfront Times, an alternative weekly newspaper in St. Louis, that entry-level pay is too low, and raises come too slowly, for many workers to afford to pay much into their 401(k)s.

Back-of-the-envelope math suggests that a senior assembly mechanic at maximum pay ($39.02 an hour) would come out about $4,000 ahead over three years, in terms of company retirement contributions, under the latest offer. That’s assuming the senior mechanic opts to put the ratification bonus into their retirement fund.

We will know Wednesday night whether this meets workers’ expectations for “a lot more than what the company is giving right now to secure retirement,” as IAM General Vice President for Aerospace Mark Blondin put it at the start of talks.

Strike could start within hours of vote

Under IAM bylaws, a two-thirds vote is required to go out on strike. However, since the union’s membership already voted to strike, back on July 24, Wednesday’s vote will be a simple up-or-down vote on the offer itself. 

First-shift workers should report to work as usual, then clock out to go vote on the contract, union leaders said in a message to members Tuesday afternoon.

“If it is accepted, we go back to work,” the union said. “If it is rejected, then the strike will begin at 12:01 a.m. Thursday, Aug. 4.”

The union likely sees a strike as its best chance to get Boeing to substantially improve its offer. It’s going to be tough. Boeing isn’t flush with cash. (To illustrate the point, the company’s first contract offer to the union would have paid a ratification bonus of $4,000 in Boeing stock and only $1,000 in cash.)

But as we reported last week, the union made significant wage and benefit concessions in 2014, when Boeing’s St. Louis operations were in jeopardy as signature Pentagon programs wound down. Now, with Boeing expanding in St. Louis, union workers seek to recoup what they lost in the last round.

Strike would shut down three Boeing defense plants

Missouri doesn’t have “right-to-work” laws. This means there aren’t likely to be many workers crossing the picket lines, so a strike would effectively shut down production at Boeing’s three St. Louis-area plants:

  • St. Louis, where Boeing is building U.S. Navy F/A-18 E/F Super Hornet fighters, U.S. Air Force F-15EX Eagle II fighters, and USAF T-7A Red Hawks.
  • St. Charles, MO, where Boeing builds Harpoon missiles and Joint Direct Attack Munitions kits that turn dumb bombs into guided ones.
  • Mascoutah, IL, a new plant where Boeing will build MQ-25 Stingray UAVs for the U.S. Navy.

The keys here are the T-7 and MQ-25 programs. Boeing rolled out the first T-7 in April, and the Navy is testing how MQ-25s can refuel carrier-based strike aircraft. Boeing projects a market for 2,700 T-7s, both as trainers and as armed replacements for F-5s in allied air forces who fly them. The Navy wants 72 MQ-25s as carrier-based refueling tankers; it has considered the Stingray as a potential unmanned surveillance/strike aircraft as well.

However, the F-15EX also is a factor. Boeing delivered the first Eagle II last year, and one point the Air Force was considering ordering 144 of them to replace aging F-15C/Ds now deployed by the Air National Guard. The USAF reportedly is having second thoughts on how many F-15EXs it should buy.

 

11 Comments on “Update 8-3: Contract Approved (St. Louis Machinists vote Wednesday on latest Boeing contract tweaks)

  1. It doesn’t seem like much of an increase in Boeing offer, esp
    considering how much DoD spending is going up (see my comment from the other day on the recent NDAA vote), with ‘Dems’ just as positive as ‘Reps’ for more war spending.

  2. For the ratification bonus in Boeing stock, can the employee sell immediately, or is there a mandatory holding period?

  3. That was going to be the outcome all along. US Government was not going to let one of its main fighter builders come to a halt.

    Curious why this was a Leeham focus as it was fully the defense side. Love to talk both sides but Leeham normally has a sharp line there with the military 737s and the KC-46A exceptions as they are built on the civilian side before being moved to the conversion side.

    • @TW: Given the still precarious financial condition of The Boeing Co., a strike on the Defense side would have been a bad thing–hence relevant to the Big Picture.

      • Scott:

        From my perspective, the government was going to step in if it had to. Those are extremely important programs on the defense side that would be affected.

        A threatened strike at BCA would certainly be an issue though I think Boeing is in no position to let one occur. The union should take OLeary as their example. Try to strike (pun) when things are at their worst.

        • The “$ 17.000,000,000 windfall for Boeing!” headlines we’re seeing do not seem based in reality, to me. Some fraction of that amount will be freed up, finally; but it is in no way a “windfall” for Boeing and its stockholders: those
          resources were not created ex nihilo..

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