Is Boeing’s BAFO really it? IAM rejects it and says no vote (Update) (2)

Update 2: Here is the red-lined union contract proposal from Boeing: Redlined-CBA-IAM751W24-Sept-23-2024 (1)

Here is a Boeing FAQ link.

By Scott Hamilton

Sept. 23, 2024, © Leeham News: Boeing’s Best and Final Offer (BAFO) today to its striking IAM 751 union membership for a new contract is a risky gamble.

The offer bypassed the local’s negotiating team and appealed directly to the membership. 751 leadership already filed a complaint with the National Labor Relations Board for alleged violations of collective bargaining laws for the same reason during the original contract negotiations.

Boeing risks a new complaint over its latest move, which almost certainly angered Jon Holden, president of 751, and the negotiating team. No comment has been forthcoming from Holden or 751, but the president of the “parent” IAM issued to following statement, ABC TV News reported yesterday:

“Employees knew Boeing executives could do better, and this shows the workers were right all along. The proposal will be analyzed to see if it’s up to the task of helping workers gain adequate ground on prior sacrifices,” said Bill Bryant, president of IAM International.

The absence of a comment from 751 doesn’t mean others aren’t. Two retired Boeing IAM members told LNA the BAFO is acceptable and said union members should approve it. However, social media commentary takes a decidedly different view.


Update: The IAM 751 just posted a response to its Twitter (X) account, here. It’s a scathing reply.  In part, the union leadership said, “THIS IS A NON-NEGOTIATED OFFER from Boeing. Your Negotiating Committee did not have any discussion or input on this offer. We have said all along that the Union would be available for direct talks with Boeing or, at a minimum, expected to continue mediated discussions when the company was ready. These direct dealing tactics are a huge mistake, damage the negotiation process, and attempt to go around and bypass your Union negotiating committee.” (Emphasis is the union’s.)

There will be no vote Friday, the union says.


One post on Reddit mocks Boeing’s “Best and Final Bingo” offer. There are claims of “astroturfing,” ie posts that purport to be from IAM members but which are believed to be ghosts for Boeing. There’s no proof, but one former IAM member said that during the contentious 2013/2014 vote for concessions in exchange for the 777X assembly in Everett astroturfing was traced to Boeing.

Other posts make it clear that there is resentment over Boeing’s releasing the BAFO to the media before the members received it. And generally, there remains a belief that Boeing can do more.

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Boeing makes “Best and Final Offer” to IAM; sets Sept. 27 midnight deadline

Sept. 23, 2024, (c) Leeham News: Boeing issued its Best and Final Offer (BAFO) to its largest union, the IAM 751 a short time ago. The company set midnight Friday as the deadline to accept it.

So far, there has been no comment from the union. The union went on strike at midnight Sept. 12 after rejecting a contract with a 95% vote and went on strike with a 96% vote.

Boeing’s website has additional information.

A retired union member told LNA the members should accept this one, with the restoration of the year-end bonus a key feature.

 

 

Why the IAM 751 rejected the Boeing contract and what is needed for approval

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By the Leeham News Team

Analysis

Sept. 16, 2024, © Leeham News — The lopsided outcome of last week’s vote by the International Association of Machinists District 751 union members to resoundingly reject Boeing’s four-year contract offer caught a lot of observers by surprise, including us.

Not that we didn’t expect the offer would be rejected. That seemed a reasonable bet. But if anyone tells you their Magic 8 ball had predicted a 94.6% vote to reject the contract and a 96% vote to strike, they’re overstating.

Our industry sources tell us that Boeing management was utterly gobsmacked by the result. Even the union staffers and officers we talked to on the night of the vote were surprised.

The result is now that some 33,000 751 members spent the weekend on picket lines surrounding Boeing facilities in Washington state, Oregon, and Edwards Air Force Base in California.

And Boeing management, which had very little leverage going into these contract talks, has approximately zero leverage now.

The problem, for everyone in our industry hoping for a quick resolution of this strike, is that Boeing has been acting since intensive talks started in August like it doesn’t understand how little leverage it has over the union this year. Despite new CEO Kelly Ortberg’s factory floor visits and talk about a “reset” with the unions at Boeing, Boeing acted like it believes it’s still 2014 when it won a bitter fight for a contract amendment granting concessions in exchange for locating the 777X final assembly line in Everett (WA).

Maybe Thursday night’s results will be the moment Boeing’s labor relations strategy needs if it’s ever going to solve its interconnected safety, quality, reputational, and cash-flow problems.

Summary
  • What’s the latest
  • Why the offer failed
  • At the table
  • Where we are
  • How does this end?

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Boeing CFO: we want to negotiate; taking steps to preserve cash

By Scott Hamilton

Sept. 13, 2024, © Leeham News: Brian West, the CFO of The Boeing Co., said management wants to get back to the negotiating table with its largest union, the IAM 751, to reach a new contract agreement as quickly as possible.

He also said the company is taking steps to preserve cash following a strike that began at midnight yesterday after the union rejected a contract by an unprecedented 95% vote and authorized a strike with 96% of the vote.

The strike comes at a time when Boeing is losing billions of dollars in cash, remains in a loss-making position, and struggles to recover from five years of crises and self-inflicted turmoil.

West made his remarks this morning in a previously schedule appearance at the annual Morgan Stanley Laguna Beach investors conference.

An edited transcript of his appearance follows.

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IAM files Unfair Labor Practice against Boeing in thumping rejection of contract

 By Scott Hamilton

 Sept. 12, 2024, © Leeham News—Seattle: Members of Boeing’s largest union, the IAM 751, gave the company a thumping in rejecting a contract offer tonight. The contract was rejected by 94.6% of the vote and 96% of the members voted to go on strike at midnight. It was a thumping of unprecedented proportions, said a union member.

Jon Holden, the president of IAM 751. Photo Credit: Leeham News.

Union president Jon Holden said the 751 also filed an Unfair Labor Practices (ULP) complaint with the National Labor Relations Board. He claimed Boeing violated the law in several ways that prohibit company contact directly with members during negotiations.

Holden, who came under some withering criticism from some members for recommending the contract, previously said it was the best that could be achieved at the negotiating table. But in the end, the members had the final say, Holden said tonight.

“While there were many important things that were in this offer, it didn’t make up, it didn’t bridge the gap for 16 years from 2008 and going through two extensions and the threats of job loss, stagnated wages, cost shift on healthcare, and many other issues, especially relocation of thousands of jobs for other programs here in the state,” Holden said at a press conference after announcing the vote.

“Our members spoke loud and clear tonight. All day they were voting across Puget Sound, across Portland, Victorville, California, Edwards Air Force Base, and Moses Lake. I’m proud of our members. I’m proud of them for standing up and fighting for more for each other, for their families, for the community.”

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IAM rejects Boeing contract, strikes at midnight

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By Karl Sinclair

Sept. 12, 2024, © Leeham News: Boeing’s largest union today rejected a four-year contract and approved a walk-out beginning at midnight tonight.

The vote to reject the contract and go on strike were overwhelming: 94.6% to reject the contract, 96% for the strike.

For financially ailing Boeing, a strike is the last thing it needs. When the union, IAM 751, last struck in 2008, the walk-out lasted 57 days and set the foundation for labor wars that continued to this day. Then-CEO Jim McNerney the following year located the second 787 assembly line in South Carolina. (The first line, in Everett, was closed during the COVID pandemic.) In 2011, McNerney threatened to build the 737 MAX elsewhere if 751 members didn’t approve a contract amendment with concessions. He repeated the process in 2013 and 2014 with the 777X development. The latter was the second amendment to the 2008 labor contract that governed wages and benefits for the huge union, which represents workers at Boeing’s factories in Renton and Everett, home to the 737 and 767/KC-46A and 777, respectively. The IAM 751 also represents workers at other Boeing locations.

Union leadership want to recover benefit concessions and sharply increase wages that failed to keep up with inflation. They wanted a guarantee that the next Boeing airplane will be assembled in Puget Sound (the greater Seattle area). They wanted a seat on the Board of Directors and a role in changing Boeing’s failed safety culture.

Management wanted to hold the line. The company remains in a loss-making position, led by the continuing turmoil at Boeing Commercial Airplanes. The defense unit, which is not represented by 751, also is bleeding profits. The two units caused Boeing to burn through nearly $10bn in cash in the first half of this year alone. Only the services unit is making money, but not nearly enough to offset the losses and negative cash flows at the other two units.

More losses and negative cash flow is expected for the quarter ending this month. Company CFO Brian West speaks at a Morgan Stanley investors conference tomorrow. His will be the first detailed response to the union vote, whatever the outcome.

Internally, Boeing prepared for a 2-12 week strike.

Some observers fear that a long strike could shove Boeing into bankruptcy. LNA doesn’t agree, but we’ve nevertheless analyzed the prospect.

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Critical labor contract vote for Boeing, IAM 751 today

By Karl Sinclair and Scott Hamilton

Sept. 12, 2024, © Leeham News: The International Association of Machinists (IAM) District 571 votes today on a contract proposal negotiated between union leadership and the management at Boeing (BA). It’s a critical vote for both parties.

The four-year contract calls for a 25% pay hike, a $3,000 signing bonus, an improved benefits package, and a commitment to build any future new aircraft in the Seattle area during the next four years.


Boeing yesterday issued a new Contract comparison sheet in advance of today’s vote: Boeing Contract Comparison_Fact_Sheet 9-11-24


Union workers can reject the offer, which must be approved with a 50%+1 majority. A second vote on a motion for strike action if the contract is turned down will also be on today’s ballot. A strike vote must be approved by a two-thirds majority. If this fails, the contract becomes adopted irrespective of the accept-or-reject vote. Boeing is desperate to avoid a shutdown as it faces pressure from customers, regulators, and suppliers who have endured one of the worst stretches in its history.

On Wednesday morning, hundreds of workers walked out of the Everett factory to rally against the contract. Engineers at the Renton factory were sent home because demonstrations there made it too noisy to work. They were told to work from home today,.

Leadership at the local previously indicated that they intended to demand a 40% raise for members, along with a seat on the board of directors, having gone through 16 years of giving concessions to management, as they were strong-armed in previous negotiations.  Read more

Boeing IAM vote in 2 days; approval a hard sell

By the Leeham News Team

Sept. 10, 2024, © Leeham News: Boeing’s touch labor union, the International Association of Machinists and Aerospace workers District 751 (IAM) votes in two days on a new labor contract.

Although a Tentative Agreement was reached Sunday and union leadership endorsed it, getting 50%+1 vote to ratify the contract appears in trouble. A concurrent strike vote requires a two-thirds majority for a walk out, and there is split opinion whether this high threshold can be met.

This will be a hard sell for IAM leadership. The deal makes progress in the areas IAM members identified as priorities, but falls short of the union’s stated goals in most of them:

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Boeing, IAM reach tentative agreement on new contract

By Scott Hamilton

Boeing CEO Kelly Ortberg. Photo source: Boeing. The new contract agreement between Boeing and the IAM 751 avoids a strike and potentially marks a new era of labor relations between the two.

Sept. 8, 2024, © Leeham News: In a development that is contrary to all expectations, The Boeing Co. and the IAM 751 labor union reached a tentative agreement this morning on a new four-year contract.

IAM members, who assemble Boeing’s airplanes in the great Seattle area, get a 25% raise over the life of the contract; the union asked for 40%. The value goes up to 33% in “wage growth” when the wage increases, and “progression” are calculated. Certain pay grades did get a 42.3% increase, the IAM said.

There is a lump sum payment of $3,000 and Boeing’s 401(k) contribution increases up to $4,160 per employee per year. The union asked for a return to a defined benefit plan, which was probably a non-starter. Lower costs for medical care were agreed.

Boeing committed to build the next new airplane in the Seattle area. A Boeing spokesperson did not have details whether this would be in Renton, where 737s are built, or Everett, where widebody aircraft are currently assembled. Boeing also committed to keep the current 737, 767 and 777X production in Puget Sound.

The union also wanted a seat on the Boeing Board of Directors. Neither side referred to the seat in their information released today, so it appears this may not have been agreed. The Boeing spokesperson had no information on this and the IAM wasn’t immediately available to comment.

The IAM leadership unanimously recommends approval of the contract. The vote is set for this Thursday.

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If a strike occurs, here’s what Boeing can do

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  • Contingency plan for 4-12 week strike.

 By the Leeham News Team

Analysis

Sept. 5, 2024, © Leeham News: There seems to be quite an expectation that there will be a strike by Boeing’s touch labor union, the IAM walkout at Boeing this contract cycle.   The costs associated with a strike are well understood. Crippled cash flow, upset customers, and stock price losses not counting the damage to the companies in Puget Sound that built much of their business models on Boeing worker’s paychecks. It’s never a good thing to sustain a strike of any duration because the disruptive effects can last for years.

The last time the IAM struck was in 2008, for 57 days. The strike cost Boeing billions of dollars in lost revenue, much of which was made up in the following years. The ill-will generated by the strike affected customers. Management-labor relations remain strained to this day. Union leadership is determined to recover previous givebacks in wages and benefits. They want a seat on the Board of Directors, a role in improving Boeing’s safety culture, and a guarantee that the next airplane will be assembled in Puget Sound.

Talks remain far apart, according to the union. Boeing says progress is being made. A strike seems likely at this stage.

Boeing is clear about a strike potential. In a message last week to employees, Boeing said:

Does Boeing want a strike so it can stabilize production or allow time for the supply chain to recover?
Absolutely not. Any work stoppage, whether days, weeks or months, would disrupt our production system, supply chain and most importantly, our customers. When Boeing cannot deliver airplanes as scheduled, customers question our reliability. A strike would only help the competition and hurt our suppliers.

What is Boeing supposed to do if the IAM walks out?  The usual answer is sweeping and cleaning and trying to deliver whatever you can sneak out the door to keep the money coming in.  It is never a very effective way to operate.

Here are some points to ponder if the strike occurs and Boeing production shuts down.

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