Boeing Talks Will Test Unions’ Sway as Labor Market Softens

Boeing Co. is set to begin contract talks Friday with the International Association of Machinists, offering a test of organized labor’s continued clout as the US labor market falls to Earth from its post-pandemic heights.

The negotiations will show whether US unions can keep delivering the eye-popping gains of 2022 and 2023, when a shortage of workers gave them historic leverage at the bargaining table. IAM—representing more than 32,000 mechanics in Washington and Oregon—believes it can, demanding a 40% wage increase over three to four years at the center of a bold proposal to reverse painful concessions on wages and retirement security.

Boeing may find itself in a weaker negotiating position thanks to a tight market for aerospace workers—and a near-disaster on a 737 Max over Oregon in January after years of mechanical problems with the Max models.

“The stakes are enormous,” said Richard Aboulafia, managing director of AeroDynamic Advisory, an aerospace consulting firm. Boeing, he said, was “foolish enough to think it would always be in their favor, that they would have the upper hand.”

The union is looking to make up for years of losses in a controversial 2014 contract that provided small raises—just 4% over eight years—that were gobbled up by inflation. Boeing also replaced defined-benefit pensions with 401(k)s, following a nationwide trend of switching to contribution-based plans.

The union has scheduled a vote for strike authorization July 17, but couldn’t legally walk out until the contract expires Sept. 12.

Boeing declined to make anyone on its bargaining team available for an interview. The company struck a conciliatory tone in a statement on the talks Tuesday, saying it’s is confident it can reach an agreement “that addresses the needs of our employees while allowing us to win new business in a very competitive global market.”

‘More Power’

The talks could lead to another major labor disruption in the West less than a year after a port workers’ dispute snarled shipping operations and Hollywood shut down over a months-long writers and actors strike. Negotiations will play out against a jobs market less favorable to workers than the post-pandemic hot streak, but still more durable than economists once thought.

Meanwhile, revised federal data released Wednesday show that job openings hovered at 8.86 million in January—still more than one for every unemployed person, but far lower than the 12 million in March 2022.

But layoffs in the tech and media industries rattled the white-collar workforce in recent months. Job departure rates were the lowest in three years, reflecting diminished confidence among workers that they could find a new position—a far cry from the Great Resignation that took hold in 2021, when dissatisfied workers quit their jobs in droves.

“There’s still an overall sense of workers having more power than they have had in a long time,” said Todd Vachon, an assistant labor studies professor at Rutgers University. “Maybe not as much as in 2022, but more than in 2019.”

During its last contract battle with the union, Boeing behaved aggressively, threatening to close up shop and move production elsewhere. A likely landing spot was South Carolina, a right-to-work state with one of the weakest union presences in the nation, where the company had already started assembling its new 787 Dreamliners.

The contract failed on a first vote, squeaking by with 51% approval after IAM national leadership called for a do-over.

Labor Hopes

The union may have more reason to be hopeful this time.

Boeing has less leverage than in 2014, losing $30 million in the fourth quarter of 2023, continuing a five-year streak of annual losses. Mechanical failures in 2018 and 2019 caused two crashes that killed 346 people and prompted federal authorities to ground the jets for 20 months.

The company’s latest problem emerged Jan. 5, when a door panel was ripped out on an Alaska Airlines flight. The National Transportation Safety Board on Wednesday accused Boeing of failing to cooperate with investigators. Passengers are suing the company for $1 billion.

“Boeing right now should prioritize having a stable, well-compensated workforce that can focus completely on helping the company execute a plan to improve quality, and not have workers worried about whether they’re getting paid enough or not,” said Sharon Block, a former Biden administration official who leads Harvard Law School’s Center for Labor and a Just Economy.

The unionized Boeing workers bear similarities to the United Auto Workers, who were able to claw back some Great Recession-era concessions and get minimum pay raises after waging a six-week strike against Detroit’s Big Three last year, according to observers.

The union has an opportunity to use unconventional surprise-strike tactics that pushed the automakers from their footing and contributed to the UAW’s success, Vachon said. In the auto strike, the union didn’t reveal its strike targets in advance, making it hard for the companies to develop contingency plans.