Striking Machinists to vote Thursday on revised contract offer from Spirit

Striking Machinists Union members outside the Spirit AeroSystems plant in Wichita, KS./ Wichita Business Journal photo

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By Bryan Corliss

June 27, 2023, © Leeham News – Striking Machinists Union members at Spirit AeroSystems in Wichita will vote Thursday on a new contract offer from the company.

“The parties have reached a tentative agreement with the unanimous support of the entire Local 839 bargaining committee,” the union said Tuesday.

The tentative deal, which comes after three days of meetings between Spirit and union negotiators with a federal mediator, replaces the original offer rejected on June 21. Spirit shut down production at the Wichita plant the next day, and the union began picketing outside the factory on Saturday.

Spirit CEO Tom Gentile said his team “listened closely and worked hard in our talks over the last several days to further understand and address the priorities of our IAM-represented employees.”

Senior regional leaders of the International Association of Machinists are strongly recommending the deal.

“The contract is an industry-leading agreement that should make our members extremely proud,” IAM Southern Territory General Vice President Rickey Wallace and his chief of staff, Craig Martin, said in a statement released by the union.

A quick resolution to the walk-out would benefit Boeing. The Spirit plant in Wichita provides 70% of Boeing 737 aerostructures, along with nose sections for all other Boeing aircraft. It also provides components for the Airbus A220.

Thursday’s vote would require a simple majority for ratification. If it fails to get majority support, the strike would continue.

  • Deal walks back unpopular health plan changes
  • Bigger raises, reduced signing bonus
  • Contract would end mandatory weekend overtime
  • Union announced vote after meeting with stewards

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Update: Spirit presents revised contract offer to striking Wichita Machinists

Striking workers outside the Spirit AeroSystems plant in Wichita, KS./Wichita Business Journal photo

By Bryan Corliss

June 21, 2023, © Leeham News – Spirit AeroSystems has presented a revised contract offer to striking members of the International Association of Machinists.

“We have delivered a revised offer to the IAM following days of positive discussions with IAM representatives, along with the assistance of the federal mediator,” the company confirmed to LNA. “We remain committed to reaching a timely and fair resolution.”

IAM District Lodge 70 in Wichita, which is the parent organization for striking members of Local 839, announced Monday night that it would hold a mandatory meeting for union stewards today to discuss a contract offer. However, from the statement, it wasn’t clear whether the meeting would be to cover a new offer, or review the one that workers rejected with a 79% no vote June 21.

This morning, however, Spirit confirmed to Wichita station KSN-TV, as well as the Wichita Business Journal, that it had presented a revised offer to the IAM. Any details would be released later in coordination with the union, Spirit said.

Spirit and IAM negotiators have been meeting with a federal mediator since Saturday.

If Spirit has presented a revised offer, it would not be surprising that the union’s negotiating team would want to review it with union stewards before deciding whether to take it to the entire membership for a vote. The union stewards are full-time employees of Spirit who volunteer as union representatives to assist their coworkers in resolving questions surrounding pay, benefits and other contract questions. As such, they will have the best sense of how their coworkers would respond to the new offer.

Picket lines went up around the factory just after midnight Saturday morning. Today, with thunderstorms in the forecast, Spirit invited strikers to take cover in the shacks manned by security guards at the factory’s various gates. “Our primary concern is for their safety,” the company said.

 

 

Analysis: What went wrong in Wichita for Spirit and IAM

Striking members of Machinists Union Local Lodge 839 outside the Spirit AeroSystems plant in Wichita, Kans./Photo by The Wichita Eagle

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By Bryan Corliss

UPDATE: The two sides will continue talks with a federal mediator on Monday. In a statement, Spirit AeroSystems CEO Tom Gentile said the negotiating teams “have been working hard and making good progress.”

“We will continue discussions this week and remain committed to a timely resolution on a fair and competitive contract that addresses the priorities of our employees and other stakeholders,” he said.

Local 839 negotiators told their members that “with the mediator’s help, we are progressing toward getting another offer to the membership for consideration.”

June 26, 2023, © Leeham News –
Strikers in Wichita broiled under a hot summer sun this weekend, as the International Association of Machinists’ strike against Spirit AeroSystems got under way.

The good news, for everyone who’s watching in the North American aerospace industry, is that the two sides resumed talks Saturday, with the help of a U.S. federal mediator.

This walk-out caught a lot of us by surprise. Insiders I talked with before the vote didn’t expect a strike. Equity analysts confidently projected the risk of strike as “very low.” Spirit itself must have been confident, because it sent much of its senior leadership team to Paris for the air show.

So what went wrong? Clearly both Spirit management and the union’s negotiating team misread the mood, and badly.

We took a deep dive into what workers are saying on social media about the contract. As we’ve noted in the past, social media posts aren’t the same as scientific surveys, but they do give some insight into the mood in Wichita.

And what they reveal is that there was a lot of frustration around some specific issues, which was exacerbated by the fact that IAM Local Lodge 839 had been locked into its recently expired contract for 13 years, during which pay and benefits stayed the same inside the factory, while literally the whole world changed outside it.

  • Workers didn’t like many contract specifics
  • No way to predict how long strike will last

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Spirit AeroSystems and Machinists Union return to negotiations Saturday

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By Bryan Corliss

June 23, 2023, © Leeham News — Negotiators for Spirit AerosSystems and International Association of Machinists Local Lodge 839 will resume negotiations Saturday, in hopes of reaching an agreement that would resolve a strike set to begin just after midnight tonight.

A Wichita Eagle photo of orange security fencing up around the Spirit AeroSystems plant in Wichita, Kan.

The meetings, which will include a federal mediator, will start about 10 hours after the walkout begins.

The strike, involving some 6,000 union-represented hourly workers at Spirit’s Wichita plant, threatens significant disruption to the wider aerospace industry — particularly at Boeing. The Wichita plant produces 70% of 737 aerostructures, along with the forward sections of all Boeing commercial jets.

It comes after workers rejected a proposed four-year deal on Wednesday, with 79% voting no and 85% voting to strike.

  • Company: Two sides have been talking
  • Worker: ‘Feathers on a dog don’t make it a chicken’

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Paris Day Four: Air show winds down as Spirit strike looms over industry

By Bryan Corliss

June 22, 2023, © Leeham News – The business portion of the Paris Air Show wound down today, with no new orders and news of a looming strike in Kansas that will soon grind Boeing aircraft production to a halt. 

It was a stark contrast to the high pre-show expectations. Some analysts were projecting we’d see between 2,000 and 3,000 new aircraft ordered this week in Paris. By our count, there were 1,084 – a sizable haul no doubt. However, 970 of those came from IndiGo and Air India, who had telegraphed their plans to place those orders before the show, and used Le Bourget as a backdrop for signing the papers. Read more

Update: Spirit shuts down 737 lines after Machinists Union votes to strike

By Bryan Corliss

June 21, 2023, © Leeham News – Machinists Union members at Spirit AeroSystems in Wichita have overwhelmingly rejected a proposed four-year contract, setting the stage for a strike.

The contract between Spirit and IAM Local 839 expires at 12:01 a.m. Saturday. However, Spirit said Wednesday night that it would shut down production starting with Thursday’s first shift.

IAM members were not to report to work Thursday, the company said. They will get paid for their regular shifts, but all overtime is canceled.

Local 839 said that 79% of union members who cast ballots voted to reject Spirit’s offer, and 85% voted to authorize a strike. 

“Most of our members have concluded the company’s offer is unacceptable,” union officers said.

Spirit leadership said it was “disappointed” by the outcome.

“We know that no one wins in a work stoppage; however, we respect the rights of our represented employees,” it said in a statement. “Despite this setback, we are not distracted from the task at hand. We look forward to continued meetings with IAM leadership.”

In a statement to Wichita-area news outlets, union officers said they would “regroup and begin planning the following steps to bring the company back to the table.”

There was no word Wednesday night whether the two sides had plans to meet.

A strike at Spirit would have significant ramifications throughout the aerospace industry. The company supplies Boeing with 70% of the aerostructures for the 737, and without those fuselages coming by train from Kansas, work at Boeing’s Renton factory will eventually come to a halt, impacting airlines who are expecting jets, as well as other suppliers who provide parts, components and subassemblies for Boeing’s best-selling commercial aircraft. Spirit also builds the nose sections for the 787, 767 and 777.


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The union’s negotiating committee had recommended approval on the Spirit offer, which it received on Friday.

However, the contract seemed in trouble during a Wednesday morning union meeting, prior to the vote. The Wichita Eagle reported that workers made paper airplanes out of the pages of the contract summary, and covered the floor of the arena where they were meeting with them. In addition, Wichita station KWCH-TV published a photo of its website of workers wearing t-shirts emblazoned with the message “That’s a Big No.” 

  • Contract offered 34% more pay over four years
  • Workers had gone 13 years without a new contract

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Machinists Union members at Spirit to vote on four-year contract this week

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By Bryan Corliss

June 19, 2023, © Leeham News – Roughly 6,000 Machinists Union members at Spirit AeroSystems in Wichita will vote Wednesday on a proposed four-year contract that would significantly increase pay for hourly workers.

The bargaining committee for IAM Local 839 is recommending that its members accept the deal. 

“This is not an easy decision, but it is one that we believe is a good one,” the committee wrote in a letter to members on Friday.

It noted, however, that “the decision to accept or reject this offer is up to the membership,” and added that however the vote goes, the leadership “stands 100%” behind what the members decide. 

At least some of those members are vocally urging the deal be rejected. 

“How on earth did you think this is an offer we should accept?” one worker wrote on Local 839’s Facebook page. “You have betrayed us.”  

The current contract expires just after midnight Friday, June 23. 

  • Offer on its face is generous
  • Comes after 13 years without a new contract
  • Industry-wide ramifications should a strike occur

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UPDATE: Spirit says 737 manufacturing errors will disrupt deliveries through July

By Bryan Corliss 

March 3, 2023 © Leeham News – The manufacturing errors its team made on Boeing 737 MAX fuselages will cost Spirit AeroSystems at least $31 million to fix, with work on the units still at the Wichita factory going on until the end of July, the company reported this morning.

But that’s just the start, Spirit executives warned.

“Additional costs are expected, including costs Boeing may assert to repair certain models of previously delivered units in their factory and warranty costs related to affected 737 units in service,” the company said in its quarterly earnings release.  

The time and cost to make those repairs will have to be determined on “a unit-by-unit analysis,” Spirit said, adding that it “cannot reasonably estimate the remaining potential costs at this time.”   

Repairs to the fuselages on hand in Wichita will cost $100,000 to $150,000 each, the company estimates. Spirit has revised its manufacturing process and implemented new quality controls, the company said.

Overall, Spirit reported an operating loss of $95 million for the quarter, which more than doubled its losses in the first quarter of 2022. The growing losses came even though Spirit increased revenues by 22% year-over-year, to $1.4 billion. 

Spirit said that since the close of the quarter on March 30, it has received $230 million in cash advances from customers, of which $180 million has come from Boeing. It will receive another $50 million in advances later this year. Spirit is to repay those advances in 2024 and 2025.

  • Some 750 737s to be inspected, may need rework
  • Spirit to increase 737 rates in August, October
  • Deliveries to Airbus to be down this year
  • ‘Fragile’ supply chain remains an issue  
  • ‘Primary object is to reward our IAM colleagues’

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UPDATED: Boeing says it still will deliver up to 450 737s this year

Boeing Co. photo

By Bryan Corliss

April 26, 2023, © Leeham News — Boeing says it will increase rates on the 737 line in Renton to 38 a month to maintain its plan to deliver between 400 and 450 737 MAX jets to airlines this year.

That was the first line of the company’s first-quarter earnings release, which showed Boeing lost $149 million on the quarter, on revenues of $17.9 billion.

Boeing had optimistically aimed for jumping MAX rates from the current 31 a month, as soon as June. However plans for the 737 line had been in question, after recent revelations that manufacturing problems and a software issue would cause delays in deliveries.

  • ‘Gnarly’ 737 defect to take weeks to fix
  • Boeing commits to MAX increases
  • Improving numbers at BCA
  • Supply chain issues continue, Boeing says

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Spirit gearing up to produce 42-a-month on 737 program by the end of 2023

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By Bryan Corliss

Feb. 8, 2023, © Leeham News – Spirit AeroSystems plans to deliver 42 new-built 737 MAX fuselages a month to the Boeing Co. by the end of this year, executives said Tuesday. 

Whether that’s how many 737s Boeing is delivering to customers is not for Spirit to say, CFO Mike Suchinksi told analysts during the company’s year-end earnings call.

“What Boeing delivers to their customers is, we have no purview. That’s on the Boeing side,” he said. “We’re just trying to communicate to you what the contract schedules have been and what we expect to produce internally and what we expect to ship to Boeing and to get paid for.” 

But Spirit and its suppliers still have major challenges to overcome before they can get to those higher rates, Suchinski and CEO Tom Gentile warned. The company, which struggled through a tough year in 2022, is making major cash outlays in early 2023 to acquire the people and materiel it will need to reach those higher rates, and that will weigh on profitability for the next few quarters.

  • Losses doubled in fourth quarter
  • Outlook: 420 737s and 650 A320s
  • Some suppliers in ‘deep distress’
  • Spirit hiring, but new workers need time
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