By William Patalon III
Money Morning/The Money Map Report
The Boeing Co. (BA). said yesterday (Sunday) that its machinists in Washington, Oregon and Kansas ended a 58-day strike when the 27,000 unionized workers ratified a four-year contract.
The Boeing statement announcing the agreement did not provide details of the union vote. A simple majority of the striking members of the International Association of Machinists and Aerospace Workers union was all that was needed to ratify the deal.
The workers had walked off the job Sept. 6, halting all commercial-aircraft production. After talks broke down – resulting in the two sides not meeting for weeks – contract negotiations resumed Oct. 23. The Chicago-based company and the IAM reached a tentative agreement on Oct. 27.
It was the longest strike in 13 years: The union walked out for 28 days in 2005 and 69 days in 1995.
Both sides claimed victory this time around. The union said that it “won the battle and made some significant gains,” while Boeing claimed it had “retained the flexibility necessary” to manage its business, Reuters reported.
Union workers were to return to work for the third shift yesterday.
The production walked off the job because of a dispute over contract provisions related to health-care benefits and job security. The machinists had initially wanted a 13% pay raise over three years and to rewrite certain language in the contract relating to outsourcing. The agreement reached Monday gives workers a 15% raise over the four-year life of the contract and gives the union more scope for challenging Boeing’s use of outside contractors. The deal also grants lump-sum payouts totaling at least $8,000 per employee over the four years. It also immediately lifts pension payments.
The pact, longer than ones Boeing previously signed with the IAM, “addresses the union's job-security issues while enabling Boeing to retain the flexibility needed to run the business,” Scott Carson, president and chief executive of the Boeing Commercial Airplanes division, said in a statement.
Boeing now must turn to its labor negotiations with its engineers and technical workers. Boeing's current contract with the Society of Professional Engineering Employees in Aerospace expires Dec. 1, MarketWatch.com reported.
Boeing originally predicted the strike would last about a month, Money Morning reported. Back in mid-September, Tom Buffenbarger, the union’s national leader, told The Seattle Times that if the strike costs Boeing $100 million a day in lost sales – as many Wall Street analysts estimated – it would take strikers one month and one week to drain Boeing’s $10 billion cash reserve.
The union represents about 25,000 Boeing production workers in and around Seattle, another 1,500 in Gresham, Ore., and 750 in Wichita, Kan, TV station KXMB in Bismark, N.D. reported.
Boeing’s shares jumped $1.72 each, or 3.39%, to close at $52.42 Friday. On Wednesday, when the union announced it would hold the ratification vote Saturday, the shares soared $6.55 each, or 15.5%, to close at $48.91. The company’s shares still are down 47% from their 12-month high of $98.71.
News and Related Story Links:
Money Morning News:
Striking Machinists to Vote Saturday on Deal To End Boeing Walkout – Shares Soar.
Boeing: Machinists clear accord, will return to work.
Money Morning News Analysis:
With Tanker Deal Shelved, Boeing Must Dig in For Possible Long Strike.
Union votes Saturday on Boeing strike settlement.
Boeing, Union Reach Deal to End Strike; Shares Jump.
About the Author
Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning. With his latest project, Private Briefing, Bill takes you "behind the scenes" of his established investment news website for a closer look at the action. Members get all the expert analysis and exclusive scoops he can't publish... and some of the most valuable picks that turn up in Bill's closed-door sessions with editors and experts.