Boeing ends strike: 44 percent pay rise for 33,000 employees

"There is no Boeing without IAM". Under this motto, the trade union IAM (International Association of Machinists and Aerospace Workers) staged a 53-day strike at Boeing production. With a success to be proud of. In four years' time, when the agreement reached expires, colleagues will earn 43.65 percent more than before.

Nevertheless, the enthusiasm among the workforce is modest. This is because Boeing has apparently made no promise to reverse the elimination of 17,000 jobs (out of a total of around 170,000) across the Group. The job cuts affect all areas, not just production, which is on strike. Nevertheless, only 59 percent of the 33,000 production workers on strike voted in favor of the new agreement with higher wages. The agreement was only reached thanks to the mediation of the current US Secretary of Labor, Julie Su.

But a majority is a majority, so the strike is over. Salaries will rise by 13 percent immediately, with increases of nine, nine and seven percent over the next three years, totaling 38 percentage points. With compounding, this amounts to 43.65 percent. There is also an immediate payment of 12,000 US dollars as compensation for the salaries withheld during the strike. From now on, the lowest salary level will be automatically indexed according to the cost of living, and Boeing is also withdrawing planned cuts to bonus programs and pension contributions. Improvements have also been made to sick pay and overtime rules.

"Living wage"

The union speaks of "life-changing" improvements that will enable Boeing workers to support their families. It hopes that the example will set a precedent across the industry and convince more working Americans to join a union.

"The contract also lays a new foundation for the future", writes IAM, "We are ready to help Boeing change course and return to building the best and safest airplanes in the world. Our members are essential to this task, and now we have a stronger voice in the decision-making process to ensure these necessary improvements happen."

Boeing has miscalculated

Indeed, Boeing urgently needs to change course. Safety issues have been impacting Boeing's business performance since the crash of two 737 Max 8 aircraft in October 2018 and March 2019; it was only five years after the (arguably avoidable) accidents that Boeing pleaded guilty to the crime of conspiracy to commit criminal fraud. This move was unavoidable after a virtually new Boeing 737 Max 9 lost a door hole cover during flight earlier this year.

In addition, the company has suffered considerable losses on aerospace and military contracts. The company concluded fixed-price contracts and made huge miscalculations. There are now even rumors of a sale of the space division to Blue Origin. The strike has exacerbated the financial situation and slowed down the production of civilian products derived from military projects in particular. US media estimate the strike costs at 100 million dollars per day.

The problems have not arisen suddenly, but have accumulated over decades. In particular, the outsourcing strategy pursued by former CEO Harry Stonecipher has had a lasting impact. It was important to him that Boeing "ran like a business instead of a great engineering company." Since he took office as Boeing President in 1997, the company has spent more than 60 billion US dollars on the purchase of its own shares. This supports the share price, which certainly doesn't hurt the management, but the money is then lacking elsewhere, for example in quality assurance, the development of a new generation of aircraft and the remuneration of employees. Robert "Kelly" Ortberg has been the new Boeing CEO since August.

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