Boeing workers vote on a new contract, but the company’s problems are far from over

SEATTLE – Boeing’s machinists union overwhelmingly rejected the company’s first contract offer more than five weeks ago.

Now there is a better offer on the table. And this time, the vote could be much closer.

“Our members have been able to get Boeing moving a lot,” said Jon Holden, president of the International Association of Mechanics and Aerospace Workers District 751.

But even Holden isn’t sure how its 33,000 members will vote on Wednesday.

“I don’t know,” Holden said in an interview. “I know there is a lot of emotion. There’s still a lot of anger.”

What seems certain is that Boeing’s problems will outlast the strike, whenever it ends. The company has been losing more than $1 billion a month since the strike halted production at its Pacific Northwest factories.

Even before the strike, Boeing was struggling with production and quality control issues that limited production of its best-selling 737 line. New CEO Kelly Ortberg has announced plans to lay off roughly 10% of her workforce.

“Restoring our company requires difficult decisions, and we will need to make structural changes to ensure we can remain competitive,” Ortberg said in a memo to employees earlier this month.

Boeing declined to make Ortberg available for an interview. Since taking over as CEO of Boeing in August, he has kept a low profile. Ortberg is expected to speak publicly for the first time during an earnings call Wednesday morning. The company already said it will post losses of at least $5 billion in the third quarter alone.

Ortberg takes over at a crucial time for Boeing. The head of Emirates, a major Boeing customer, said this month that the plane maker could be headed for a credit downgrade, with bankruptcy “on the horizon”.

Boeing quickly announced that it intends to raise billions of dollars to replenish its cash flow, including up to $25 billion by selling stock and other securities, and another $10 billion through a new line of credit.

Other observers say Boeing’s problems are not so bad. At least, not yet.

“I don’t think bankruptcy is inevitable,” said Kevin Michaels, CEO of AeroDynamic Advisory, an industry consulting firm. “It is a possibility. It’s a bigger possibility today than it was six months ago or a year ago. But I don’t think it’s inevitable.”

Michaels worked closely with the Boeing CEO in the 1990s, when both were at Rockwell Collins. And Michaels believes Ortberg’s strategy to downsize the company is fundamentally sound.

“Boeing is a bloated mess,” Michaels said. “They are very heavy. And that slows down their decision-making.”

In the long run, Michaels believes Boeing can still turn things around, especially if it is able to sell underperforming assets.

For now, the focus is on Boeing’s latest offering to its amazing machinists. The machinists union credits acting U.S. Labor Secretary Julie Su with helping restart stalled negotiations.

The company is offering a 35% pay rise, a significant increase from the initial offer of 25%, although still short of the 40% increase the union wanted. The company would also increase its contributions to employee 401k retirement funds.

But there’s one key union demand where Boeing hasn’t budged: the pension plan.

“When we lost the pensions, I cried,” said Kat Kinckiner, a union steward at the Renton, Wash., plant where Boeing assembles the 737. “This was my future. And to see something just taken away like that was devastating “.

At the rally in Seattle last week, Kinckiner and other union members made it abundantly clear that they want to restore the pension plan they lost a decade ago.

“I remember then, we all said, this next contract, we don’t accept it,” he said. “This won’t happen again. Not to us. Not like this.”

IAM 751 president Jon Holden says he understands why some of his members are still angry and why some are still fighting to get the pension plan back.

“These wounds don’t heal easily,” he said. “But now it’s been ten years and it’s not easy to get something like that back.”

Union leadership is not making any recommendations on how members should vote on this offer. This is a marked difference from the previous vote in September, when the union recommended acceptance, only to be heavily criticized by some members.

“We feel it’s our responsibility to put this in front of the membership so they can make that decision,” Holden said. “I hope they take that into consideration, but it’s up to them.”

KUOW’s Casey Martin contributed reporting from Seattle and Joel Rose reported from Washington, DC