Boeing Offers 30% Pay Hike Directly To Striking Workers, Angers Unions

Boeing Co offered a 30% pay bump directly to striking workers, angering union leaders, as the embattled planemaker tries to overcome a debilitating strike that has shut down plants across the Pacific Northwest.

The proposal is an improvement over the initial 25% increase turned down earlier this month by members of the International Association of Machinists and Aerospace Workers, but still less than the 40% initially sought by the union. Boeing said the terms are final and only valid until the end of September 27, ratcheting up pressure on workers to accept.

However, Jon Holden, president of IAM District 751, said his negotiating team was blindsided by the offer and the union has no intention of putting it before rank-and-file members for a vote. Doing so on such short notice simply isn't feasible, he said in an interview.

"Setting up a vote for 33,000 people isn't just something you snap your fingers on," Holden said. Union leaders also want to talk to members about the offer, he said, adding: "We know already that it doesn't meet our members' needs."

The maneuvering has brought a harder edge to the pay negotiations. In a harsh statement posted online, IAM District 751 said that by skirting the collective bargaining process, "Boeing took it upon itself to disrespect our entire union."

The sparring injects new tension to talks that have been at a standstill since September 18, when two days of federal mediation yielded little progress. After workers voted almost unanimously to strike earlier this month, the local district said it intended to push for a substantially higher wage increase and for Boeing to reinstate a defined benefit pension plan for members.

The showdown between Boeing and workers at its main manufacturing hub is being closely watched by Wall Street and the White House as labor strife flares up in the US ahead of November's presidential election.

Strained Finances

Machinists also walked off the job on Monday at Textron Aviation, which makes Cessna Citation business jets, after rejecting a 26% contract offer over the weekend. And a potential strike by Longshoremen threatens to cripple US maritime shipping.

An extended walkout would worsen Boeing's already strained financial situation, after the company burned through more than $8 billion in cash in the first half as it slowed output to address quality lapses exposed by an aircraft accident in January.

"We heard your feedback," Boeing said in a post on its website touting the latest contract offer. "We've made significant improvements to provide more money in key areas."

The planemaker's shares jumped as much as 3.3% in New York. Boeing has tumbled 40% in value this year, the second-worst performance among members of the Dow Jones Industrial Average.

The conflict has shut down production of Boeing's cash-cow 737 Max and other jetliners, and could drain an additional $1.3 billion in cash from the company each month, according to Sheila Kahyaoglu, an analyst at Jefferies. As Boeing risks losing its investment-grade credit rating, the planemaker has begun to furlough workers and take other steps to preserve cash during the strike.

Senior managers, including new Chief Executive Officer Kelly Ortberg, have also agreed to take pay cuts for the duration of the furloughs.

The strike pits the financially ailing aerospace manufacturer against workers with a history of activism and an ax to grind with their employer. The Machinists are embittered by a 2014 agreement that cost them their pensions and locked in only modest wage increases while inflation soared earlier this decade.

War of Words

The company's latest offer includes reinstating an annual bonus that averaged around 3.7% of wages and was dropped from the initial agreement, a flash point that striking Machinists cited repeatedly in interviews. Boeing also doubled to $6,000 the bonus that workers would get if the latest deal is passed, and increased its contribution to a pension plan, which would be run by the company rather than the union.

Boeing has refused to meet since talks broke down last week, Holden said. The company did provide a brief overview of the latest terms Monday morning, but the two sides were still talking when Boeing went public with the offer, he said.

Holden said he tried again on Monday to get Boeing back to the negotiating table. "They said, 'No. The offer is the offer,'" he said.

As the war of words escalated, Boeing hit back with its own version of events.

"We have bargained in good faith with the IAM since formal negotiations began in March," Boeing said in an emailed statement late Monday. "After an unsuccessful federal mediation last week, we presented a best and final offer that made significant improvements and addresses feedback from the union and our employees. We first presented the offer to the union and then transparently shared the details with our employees."

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)