Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
- Bjorn’s Corner: Air Transport’s route to 2050. Part 6. January 24, 2025
- Boeing came close to running out of cash in 4th quarter January 23, 2025
- Hexcel Earnings: Returning to Pre-Pandemic Revenues, Ready for Rate Increases, but MAX Remains A Wild Card January 23, 2025
- GE FY and Q4 2024 Earnings Power Above Consensus Driven By Services While LEAP Makes Durability Strides January 23, 2025
- Earnings: Pay closer attention to the supply chain than to the OEMs January 23, 2025
Voting by the Numbers: How demographics weigh in Boeing contract vote Wednesday
By the Leeham News Team
Oct. 21, 2024, © Leeham News: The new contract proposal offered Saturday by Boeing to the IAM 751 membership will be voted this Wednesday.
While the offer is much better than the original Tentative Agreement voted down on September 12 and the “Best and Final Offer” Boeing floated a week later, approval by the membership is still in doubt.
Comments on social media weigh heavily against approval. These outlets are hardly scientific. But the sentiment can’t be dismissed.
The new offer doesn’t materially adjust the starting pay of about $21 per hour. Therefore, this issue remains, as LNA outlined on Oct. 14. Although Boeing’s contributions to the 401(k) plan were improved, young workers are more likely to want higher wages now than a pension fund decades in the future.
Legacy workers who saw the Defined Pension Plan taken away 10 years ago remain hostile to any contract that doesn’t restore it—something Boeing is adamant won’t happen.
With a major shift in demographics among the 33,000 members, opposition to the new offer may be stiff, and approval of this offer in doubt.
How do these numbers shape up?
IAM 751 demographics
Forty percent of the members are veterans who lost their pensions in 2014. Boeing dangled an increase in the pension benefit multiplier ($10 a month per year of service) that at most is worth $200/month to the most senior of them. This may be enough to peel off a few who are ready to retire and just holding out to see how much more they can squeeze out of Boeing. But the majority have saved for a three-month strike and will die on that pension hill.
Half of the membership is less than six years on the job. About a quarter have less than two years. They’re going to be all over the map, depending on how successful they’ve been in finding temporary jobs. The ones with less than two years gain the least benefit from this contract (but also are the ones least prepared for a long strike). About a thousand people in this group will jump to max pay on ratification, because of some long-overdue changes in wage progression. They’re obvious yes votes.
If this Under Six Years group splits 50-50 on the offer, it fails.
If Boeing gets 60% of them to vote yes (which is likely the upper limit), the offer has a chance — but only if everything else breaks Boeing’s way.
The smallest group (10%) has more than six years but less than 10 (so they’re at max pay but have no frozen pension benefit. If they vote 50-50 on the offer, it fails. If Boeing can get a majority of this group to support the offer, then the outcome is a toss-up.
Closing thoughts going into the election
Boeing is already struggling to attract and retain high-quality new hires. The current entry-level pay is comparable to DoorDash delivery drivers and Amazon warehouse workers.
People making $20 to $25 an hour can’t afford to put 8% of their paycheck into their 401(k)s, so the 100% match doesn’t mean much to them; there’s less incentive to vote yes on the offer.
That makes failure to address the wage progression piece even more important; If you’re a Grade 4 mechanic (the typical assembly worker), you’re going to make less than $29 an hour for the first six years you’re at Boeing. That means you can’t afford an average one-bedroom apartment in Everett (and forget about Renton); you’re living with roommates or commuting for an hour.
Approval on Wednesday is anything but certain.
The failure to adequately address the total compensation for new employees such that it provides a living wage and fosters retaining people (like with a pension that vests) doesn’t bode well for an organization with too much work to do and a run of quality and safety issues.
Well we can wait till Wds after the vote and then we will know!
So ironically this under 6 years unique demographic that constitutes a swing vote for the success or failure of this contract vote. For many of them will be laid off once they get back into the shop so if I was in that group I’d be thinking you know what it’s my last act of defiance go to town because of that and that only not because it was a good or bad contract because whether or not it’s good or bad contract isn’t even going to matter to them that’s the sad situation that they are in
You mean because Boeing is funding the pay deal by layoffs , vote against so that theres more layoffs if they increase the offer ?
I must say that this is an excellent analysis by LNA, and a real eye-opener.
I’m now doubting that this latest offer will be approved.
Voting NO.
Amazon raises the base salaries of its fulfilment and transportation workers in the United States by at least US$1.50 an hour to more than US$22 an hour, and more than US$29 an hour including benefits.
Nice piece and pretty accurate I believe. One thing tho – “That makes failure to address the wage progression piece even more important; If you’re a Grade 4 mechanic (the typical assembly worker), you’re going to make less than $25 an hour for the first six years you’re at Boeing. ” True under the old contract. Under the new proposal (Sept. 12 chart) a grade 4 starting pay is $24.00. $.50 progression every 6 months = $30 after 6 years which is when they will max out anyway.
Pension multiplier increase of $30 would do it for me. Salve the for the old wound
but can the lower end wage earners afford to keep on striking…..bills are coming due….mortgage/rent, truck/autos, healthcare, credit cards and of course food.
Yes, they can — because they can get gig jobs that pay the same or more as compared to their BA wages.
A scary thought for BA.
AMZN is hiring, no?
To be really competitive Boeing should stop looking at what Amazon pays and look at how much a starting mechanic can make at a Lexxus dealership. That’s who your really competition is…and those guys work a standard 1st shift without all the baggage of Boeing.
Casey.
Do dealership mechanics still get paid by Flag hours?
I agree that Boeing Machinists are skilled labor, but the comparison to mechanics working piecework with their own tools might be a bit of a stretch
@PNW
I do not pretend to know everything that goes into being a mechanic. My only point was that a comparison to Amazon is a false one. The workers at the bottom end of Boeings wage scale are in the same labor pool as other local “mechanic” type work. I was also pointing out other intangibles including “local commutes” and more likely to be working first shift instead of nights and weekends.
Thanks for the continuing coverage of the Boeing strike, and I
await Wednesday’s vote with interest.
Lots of Christmas jobs will be opening up, if they have not already. Same pay as entry-level jobs at Boeing. Strike could continue through the New Year.
But no healthcare benefits (how much a month?), no 401k contribution, no bonus, no full time, no overtime and no 35% pay raise in the 4 next years
do really think these non union companies that have Xmas jobs available want to hire a disgruntled “union worker” that refuses a 35% pay raise in their work culture?
Votaría no no me gusta esta oferta
No me gusta esa oferta es casi lo mismo
” That means you can’t afford an average one-bedroom apartment in Everett (and forget about Renton); you’re living with roommates or commuting for an hour.”
And whose fault is that? Thank you for explaining why companies are moving to the South.
Companies in Silicon Valley and Manhattan are well able to pay higher salaries to cover the higher costs of living of their employees…
Or to China… Oh, tried that. Now working to re-shore industrial production to the U.S.
Re-shoring to a country with high wages will only serve to increase inflation.
Plus: there’s a lot of talk of re-shoring to the US, but it’s easier said than done. Shortage of a sufficiently-qualified workforce is a problem in many high-tech sectors, such as semiconductor manufacturing.
The result: near-shoring (e.g. to Mexico) instead of on-shoring. And diversification, e.g. to Vietnam, Thailand and India.
Wages do not cause inflation.
https://youtu.be/F94jGTWNWsA?si=YE4DngHZgGAo_iQn
Investopedia (and just plain logic).
“What Is Wage Push Inflation?
Wage push inflation is an overall rise in the cost of goods and services that results from a rise in wages. Employers must increase the prices they charge for goods and services to maintain corporate profits after an increase in employee pay. ”
https://www.investopedia.com/terms/w/wage-push-inflation.asp
@Abalone
How much of the production costs for a 737 is related to factory worker wages? With this factor you can determine how much Boeing needs to inflate its price due to worker wages.
@ MHalblaub
The discussion above started in relation to onshoring in general — not specifically related to aviation.
Addressing your question: the cost of a 737 is not just related to the costs of Boeing’s US factory workers — you also need to ask yourself what the cost effect would be if all the materials and parts used in the 737 were sourced in the US rather than abroad.
Now do the same exercise for products such as shoes, toys, semiconductors, medicines, foodstuffs, etc.
Onshoring is inflationary.
Maintenance of corporate profits.
On shoring provides “satellite” jobs… In the U.S. It doesn’t add specifically to the bottom line of the company making the decision to on-shore sourcing or production though. So it often gets ignored as a benefit.
Lol williams. Why shouldn’t BA just outsource manufacturing outside US?? Isn’t this the ultimate solution to reward BA shareholders?
Everett and Renton assembly plants are a heavy anchor in the Pacific Northwest. Brick and mortar don’t move that way. The cost of putting up assembly facilities in “the South” kind of puts a whole lot of extra cost to the prospect of moving production there. Then there’s the facilities here. Somebody picks them up for dimes-on-the-dollar, pays the workforce Boeing thinks they don’t need respectable compensation, and there’s a third player in the international airplane industry.
And then there’s the assertion that planes made “down south” all need to be to be “cleaned up”, or finished at Renton or Everett.
companies are moving to the south because the laws there are structured entirely in favor of the corporation, which allows them to treat their employees as cattle in a race to the bottom.
worked real well for Boeing in SC where they can’t make a single aircraft that doesn’t need to fly to Everett for rework.
+1
Selling off the family silver:
“Boeing sells defence surveillance subsidiary to Thales”
“The sale is part of Boeing’s broader initiative to consolidate its financial position in the face of challenges.”
“The deal’s announcement follows a report by The Wall Street Journal, which highlighted Boeing’s strategy to divest non-core businesses to alleviate its debt burden. ”
https://www.army-technology.com/news/boeing-sells-defence-surveillance-subsidiary-to-thales/
Looking around social media, after an initial blip of positive sentiment, that as the memberships dug deeper into the offer, and got to observe the somewhat screwy way that it’s being represented to them by their own union, that they have turned decidedly against it.
The union leadership is engaging in desperate hard sell tactics, while not endorsing the offer, and nobody can wrap their head around that. The equally weird and unorthodox tack of using bonuses as an adjunct to wage increases to inflate the final numbers raises all kinds of suspicions.
This has reignited memories of an IAM driven power play against the rank and file, much like the 2014 contract. They feel the leadership is in it for themselves, and not them.
Thanks for this comment. It’s interesting to see how various unions’ leadership repeatedly get co-opted,
and always to the detriment of the rank-and-file.
Almost like there’s a plan being implemented.
Something tells me Holden will no longer be in his role whenever this is resolved.
IAM District 751 keen to clarify terms of negotiated resolution ahead of vote
“Ahead of the upcoming vote on the newly negotiated proposal and resolution to end the ongoing IAM District 751 machinists’ strike, the union is keen to combat what it terms “some of the misinformation circulating on social media and in the press” about Boeing’s most recent offer.
However, unlike the initial contract proposal, the IAM has not yet formally recommended that members accept its terms.”
https://aerospaceglobalnews.com/news/iam-district-751-keen-to-clarify-terms-of-negotiated-resolution-ahead-of-vote/
Re wage push inflation; wage rises may well help drive inflation in the short term, but if it causes investment in AI/machine technology that works 24/7 and causes management to dispense with workers, then long term it could reduce manufacturing costs.
On the other hand, other industries in the area may well see the cost of their labour increase, as Boeing takes workers that otherwise would have worked for them. From their point of view, pay rises at Boeing could be seen as locally inflationary.
All in all though, “Inflation” is a government/economist measurement taken across and averaged over the entire country. It’s not the concern of either Boeing or Boeing employees.
“It’s not the concern of either Boeing or Boeing employees.”
It certainly is the concern of BA and its employees if it results in BA’s products being uncompetitive with competitor products.
The COMAC C919 is being offered at a list price of $90M, with an attractive finance package to boot…and it has FBW, EICAS and containerized cargo. The price will probably go down further when the LEAP-1C is replaced by the homegrown CJ-1000A. No FAA cert required to sell into Africa, South America, and Central and Southeast Asia. Good luck competing with that.
Wage push inflation is a term made out of whole cloth. In only occurs in an environment of excess currency creation.
Another significant order for AB:
“Eva Air announces purchase of 33 Airbus planes”
“Sun Jia-ming, general manager of Eva Air, said the order for 33-passenger aircraft was the largest in Taiwan’s history. The A350-1000 will become the main aircraft in Eva’s long-haul fleet, especially on North American routes.”
“Eva Air said it will purchase 18 A350-1000 wide-body aircraft and 15 A321neo narrow-body aircraft, which are expected to reduce fuel consumption and carbon emissions by up to 25%.”
https://www.taiwannews.com.tw/news/5956084
—
Delivery from Q1 2027 (A350) and 2029 (A321neo).
EVA currently has 33 777-300 passenger aircraft in its fleet, aswell as smaller numbers of 787s (16) and A330s (9).
According to the former Treasury Secretary, inflation actually peaked at 18% last year, calculated using pre-1983 methods.
https://pbs.twimg.com/media/GaXVV5XWAAA1mZG?format=jpg&name=small
Many posters here tell machinists to sxck up whatever BCA offers. Child labor and slaves are next?
No wonder this is just the norm:
“… it’s astonishing that AlaskaAir has *still* not agreed a new contract with its flight attendants Flight attendants in crisis: Stripping, struggling, homeless”
https://x.com/dominicgates/status/1848439828511121577
Flight attendants in crisis: Stripping, struggling, homeless
https://t.co/b58Rgnj32u
+1
fyi Alaska Airlines Flight Attendant
Salary estimated from 31 employees, users, and past and present job advertisements on Indeed in the past 12 months. Last updated: September 19, 2024
https://www.indeed.com/cmp/Alaska-Airlines/salaries/Flight-Attendant
other info
As of October 2024, the average salary for a Southwest Airlines flight attendant is $47,079 per year, or about $22.63 per hour. However, salaries can vary widely, from $11,000 to $98,000 annually. The majority of flight attendants earn between $35,500 and $50,000, with top earners making $69,000.
source AI overview
The machinists have every right to make their own decisions. They don’t owe Boeing anything. Corporate loyalty died a long time ago. Having said that they just need to make an informed decision. It’s the older workers with the most to lose. A lot of the people who left the workforce during the pandemic came to regret that decision.
You push as hard as you can before there is nothing left to gain by fighting.
+1
I think this may be relevant, though it’s not directly related.
“Responding to what are essentially internal problems with policies targeting supposed external foes is unlikely to fix the core troubles plaguing America.”
Nicholas Mulder: “Facing America’s Social Crisis”
https://t.co/0kH4VqB99H
“Boeing-made satellite” exploded in orbit
“.. this one had issues with its main propulsion system at initial orbit raising, and another propulsion issue related to stationkeeping in 2017.”
https://x.com/amarkitzero/status/1847846274181083169
The fact is that from 2014 to the crashes Boeing made billions and didn’t think once to share the wealth and after 10 years with no raise and living on 2008 wages we deserve a 10 dollar raise minimum and 40 percent plus..the only way Boeing recovers is with my union hands that touch product..too many bean counters and overhead vice presidents of vice presidents..Kelly is doing 1 thing right in my opinion and cutting white collar and management as they are probably 30 to 1 of me…we are less than 10 percent of the cost of a aircraft manufactured here and deserve what the rest if the industry is getting paid especially with the cost of living in Washington..and make no mistake as the talent pool has been depleted you need every union member that you can get to get back what has been lost.
Thanks for this comment- with which I fully agree.
“…Kelly is doing 1 thing right in my opinion and cutting white collar and management…”
Not strictly correct.
Kelly has *said* that he *intends* to do this — but we have yet to see if it actually materializes.
Yet another MAX system with a single point of failure and the potential to cause a crash:
“FAA Issues Advisory Directive To Address Boeing 737 MAX SPCU Design Flaw”
“On October 22, the FAA issued the directive to address an unsafe condition that has existed in certain 737 MAX 8 and 737 MAX 9 aircraft, with the unit’s design having a single point of internal failure in the SPCU.”
“According to the regulator, the loss of control of both EAI systems could result in the loss of thrust on both engines due to the damage from flying in icing conditions without EAI. Consequently, it could lead to a loss of continued safe flight and landing.”
“While the FAA estimated that 205 737 MAX 8 and 737 MAX 9 aircraft were affected by the AD in the US, the RB had 820 737s identified by their specific line numbers (LN).”
https://simpleflying.com/faa-issues-advisory-directive-address-boeing-737-max-spcu-design-flaw/
—
“Most scrutinized plane in history” — ROFL.
Interesting story for those commenters here who try to pin blame for BA’s woes on line workers — this is yet another example of a (dangerous) shortcut taken at a much higher paygrade.
Thanks for that, Abalone. Shades of the 737 rudder actuation issues, which led to two all-fatalities
737 crashes, and very nearly a third one..
#shouldbefine
Don’t you just love the ludicrously generous 36-month window to address a serious, potentially lethal shortcoming on 820 aircraft?
Looks like the FAA is still in BA’s pocket where some things are concerned.
And we were told 3 years ago that this plane had been gone through with a fine tooth comb…🤭
I’ve been at for more than 28 years, and here is what I know. Boeing has gone out of their way to mess with or eliminate our benefits that we worked hard to achieve. They despise all Union’s because we all stand together. We have no power by ourselves. Every member deserves what we are asking for! Remember No Us, No Airplanes! We are not trying to hurt Boeing, we are trying to insure it has a future. From pay, quality health care, and a real retirement. We are trying to get back what Boeing has stolen from us and our families. Please vote NO on this insulting offer.
“Please vote NO on this insulting offer.” Is actually a vote yes for airlines to switch to buy Airbus aircraft. Airlines have a business to run and need a dependable source of aircraft. More instability will drive them away from Boeing
“Remember No Us, No Airplanes!” Remember No Customers, No Airplanes!
Paying the line workers at Boeing a good wage (a la Airbus)
will increase stability at that company, not lessen it.
Remember that Boeing has bought back around
$68,000,000,000 of their own stock to goose
the stock price, further benefitting the well-to-do.
True
But the stock back in the past. And yes the lower tier workers need to make more than $60k a year straight time.
The bottom line is, what are the customers thinking about their fleet strategy/future acquisitions. Whenever this contract is done, based on the deep rooted feeling of the IAM 751 leadership, expect the same “hostage” situation in 4 years. Customers will cast the most important vote, new orders or not!
@Pritchard
There are a lot of reasons not to buy from Boeing, but labor stability is going to be further down the line. This strike will not last years…at most months. If airlines are not getting their aircraft, you can blame leadership for their own neglect towards quality.
If customers buy Airbus, usually it is because they are selling an aircraft that they feel is better than Boeing (or is available when they need it).
But I will assert this, no worker is ever better off not being in a union. The executives at Boeing could care less. These are people that have not looked at the price of groceries or gas in a very long time. I think a good number of the employees are simply looking to afford a modest existence. $25/hour may work in some parts of the country. Unfortunately for Boeing, the Seattle of the last 25 years has priced working people out of that reality. You can thank the tech industry for warping reality. Asking for a wage that covers a decent existence is not being unreasonable.
When a company views its employees as a liability, it has a real problem.
@ DP
“Is actually a vote yes for airlines to switch to buy Airbus aircraft.”
I think we’re well past that station — strike or no strike.
Yet another serious AD published yesterday w.r.t. the MAX, on top of the huge stack of screw-ups that are already known.
Any airline that wants to preserve its reputation will already have drawn conclusions at this stage.
Another day, another lawsuit:
“Ohio Sues Boeing Board Alleging ‘Toxic’ Culture Harmed Investors”
“Ohio Attorney General Dave Yost is suing Boeing Co.’s board of directors in an effort to hold them accountable for an alleged “pattern of safety and compliance failures” that has harmed the company and investors.
“The lawsuit, filed Monday in the US District Court for the Eastern District of Virginia and announced Tuesday, said the aerospace company’s board members and senior managers knew about safety problems from whistleblower complaints and failed to implement adequate measures to address the vulnerabilities.”
https://news.bloomberglaw.com/esg/ohio-sues-boeing-board-alleging-toxic-culture-harmed-investors
—
Note that the suit is directed at the Board — not the line workers.
Bloomberglaw is paywalled. Do you have any other links?
Here you go:
https://www.cleveland.com/news/2024/10/ohio-sues-boeings-board-ex-ceo-over-after-safety-mishaps-with-737-9-max.html
It’s more theatre, just like the suit in Texas. Nothing will come of either of them.
Nothing will come of either of them (I just wanted to say it twice, for emphasis).
It’s hard not to think that these tilting-at-windmills actions are filed only to make the Reubens of the world think they have a voice and a say in the larger world..
cute..
The Q3 results ftom McB are out.
Loss = $6.2B on revenue of $17.8B
BCA: loss of $4B (revenue $7.4B)
BDS: loss of $2.4B (revenue $5.5B)
BGS: profit of $800M (revenue $4.9B)
As percentage of revenue:
BCA: 54% loss
BDS: 43% loss
BGS: 17% profit
https://boeing.mediaroom.com/2024-10-23-Boeing-Reports-Third-Quarter-Results
Inching closer to Chapter 11…