(Bloomberg) — Boeing Co. offered a 30% pay raise directly to striking workers as the struggling planemaker seeks to chart a path out of a debilitating strike that has shuttered factories in the Pacific Northwest for more than a week.
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But union negotiators have dismissed the possibility of a quick resolution to the impasse, saying they would not put the new offer to a vote.
The proposal is an improvement over the initial 25 percent raise rejected earlier this month by members of the International Association of Machinists and Aerospace Workers, but it falls short of the 40 percent the union had initially sought. Boeing said the terms were final and valid only through the end of the month on Sept. 27, adding to the pressure on workers to accept.
IAM District 751 President Jon Holden said his negotiating team was caught off guard by the decision. The union has no plans to put the offer to a vote among rank-and-file members because that’s not possible on such short notice, he said.
“Organizing a vote for 33,000 people is not something you expect to happen in the blink of an eye,” Holden said in an interview. Union leaders also want to discuss the offer with members, he added, warning that it doesn’t meet members’ needs.
The maneuvers have hardened the tone in wage negotiations. In a statement posted online, IAM District 751 said that by bypassing the collective bargaining process, “Boeing has taken it upon itself to disrespect our entire union.”
The clashes add further tension to negotiations that have been stalled since Sept. 18, when two days of federal mediation yielded little results. After workers voted nearly unanimously to strike earlier this month, the local district said it planned to push for a substantially higher wage increase and for Boeing to reinstate a defined-benefit pension plan for its members.
“It seems like a pretty risky strategy to try to force through an offer so soon after such a strong vote to strike,” said Nick Cunningham, an analyst at Agency Partners LLP.
The standoff between Boeing and workers at its main manufacturing hub is being closely watched by Wall Street and the White House as labor unrest intensifies in the United States ahead of the November presidential election.
Strained finances
Machinists also walked off the job Monday at Textron Aviation, which makes Cessna Citation business jets, after rejecting a 26 percent contract offer over the weekend. And a potential dockworkers’ strike threatens to cripple U.S. shipping.
A prolonged strike would worsen Boeing’s already strained financial situation, after the company burned through more than $8 billion in cash in the first half of the year as it slowed production to address quality problems exposed by a plane crash in January.
“We’ve heard your feedback,” Boeing said in a message posted on its website touting the latest contract offer. “We’ve made significant improvements to provide more money in key areas.”
Shares of the aircraft manufacturer were flat as of 9:52 a.m. in New York. Boeing shares have lost 40% of their value this year, the second-worst performance among members of the Dow Jones Industrial Average.
The dispute has halted production of Boeing’s 737 Max and other jetliners and could cost the company an additional $1.3 billion in cash each month, according to Jefferies analyst Sheila Kahyaoglu. With Boeing facing the prospect of losing its credit rating, the planemaker has begun furloughing workers and taking other steps to preserve cash during the strike.
Senior executives, including new CEO Kelly Ortberg, have also agreed to take pay cuts during the unpaid leave.
The strike pits the financially troubled aircraft manufacturer against workers with a long history of activism and unresolved scores with their employer. The machinists are embittered by a 2014 deal that cost them their pensions and guaranteed only modest pay increases as inflation soared earlier this decade.
War of words
The company’s latest offer includes restoring an annual bonus that averaged about 3.7 percent of wages and was eliminated from the original deal, a sore point that striking machinists have repeatedly raised in interviews. Boeing also doubled to $6,000 the bonus workers would receive if the latest deal were adopted, and increased its contribution to a pension plan, which would be administered by the company rather than the union.
Boeing has declined to meet since negotiations collapsed last week, Holden said. The company gave a brief outline of the latest terms Monday morning, but the two sides were still in talks when Boeing made the offer public, he added.
Holden said he tried to bring Boeing back to the negotiating table on Monday. “They said, ‘No. The offer is the offer,'” he said.
As the war of words intensified, Boeing responded with its own version of events.
“We have been negotiating in good faith with the IAM since formal negotiations began in March,” Boeing said in an emailed statement Monday night. “After unsuccessful federal mediation last week, we presented a final offer that made significant improvements and incorporated feedback from the union and our employees. We presented the offer to the union first and then shared the details transparently with our employees.”
–With assistance from Siddharth Philip.
(Update of actions in 13th paragraph.)
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