Boeing announced on Sunday that it has reached a provisional agreement with a union representing over 32,000 workers in the Pacific Northwest, potentially preventing a major strike that could have begun as early as September 13.
The proposed four-year contract includes a 25% general wage increase and a promise to build Boeing’s next commercial aircraft in the Seattle region, a significant early achievement for Kelly Ortberg, Boeing’s new CEO, who took the helm last month.
In addition to the pay hike, the deal features 12 weeks of paid parental leave, improved job security, enhanced retirement benefits, and other perks. The agreement still needs to be ratified by Boeing factory workers in Seattle and Portland, who are represented by the International Association of Machinists and Aerospace Workers (IAM), in a vote scheduled for Thursday.
Boeing Commercial Airplanes CEO Stephanie Pope emphasized the long-term benefits of the deal, stating, “This contract will ensure that our Puget Sound workforce is responsible for building Boeing’s next new aircraft, which guarantees job stability for future generations.”
The agreement, if approved, would provide Boeing with labor stability at a time when the company is grappling with financial challenges and working to ramp up production of its popular 737 MAX to 38 planes per month by year-end. Avoiding a strike is also crucial as it would prevent Boeing from becoming a focal issue during the 2024 U.S. presidential election.
Boeing has been dealing with quality concerns and increased regulatory scrutiny, particularly after an incident in January when a door plug on a nearly-new 737 MAX came loose during a mid-flight Alaska Airlines trip.
Although the union initially sought a 40% wage increase in its first full negotiation with Boeing in 16 years, the new contract includes significant improvements, such as greater involvement in the safety and quality processes within Boeing’s production system.
The IAM local representing the workers described the proposal as the best contract they’ve ever negotiated, acknowledging that while not every demand was met, the agreement represents a historic achievement for the union.
The deal also stipulates that Boeing’s next commercial aircraft, if launched during the contract’s term, will be manufactured in the Pacific Northwest, ensuring job continuity in the region. However, the timeline for the launch of Boeing’s next aircraft remains uncertain.
Aerospace analyst Richard Aboulafia noted that new product development and improved labor relations should be top priorities for Ortberg, who previously held leadership positions at Rockwell Collins. “A shift in Boeing’s approach to labor and product innovation is essential for the company’s future,” Aboulafia said.
U.S. Labor Secretary Julie Su had been closely monitoring the negotiations, urging both sides to agree on a “fair contract” in recent discussions. Su had reportedly spoken with both Boeing CEO Ortberg and IAM local leader Jon Holden to encourage a resolution.
Earlier this year, Boeing workers, who manufacture the company’s widebody 777 and 767 models in addition to the 737 MAX, had voted in favor of authorizing a strike, escalating the pressure on Boeing to reach a deal.
The Federal Aviation Administration (FAA), which halted Boeing’s plans to increase production of the 737 MAX earlier this year after the door panel incident, has heightened its oversight of the company. FAA Administrator Mike Whitaker is scheduled to visit Seattle later this month to meet with Ortberg and review Boeing’s ongoing quality improvement efforts.
