Boeing, Machinists Reach Tentative, Potentially Transformative Deal

Boeing and the machinists union have reached a tentative, four-year agreement that would keep new commercial airplane production in the Pacific Northwest, provide significant pay and benefits boosts, and address gaps on other key issues that have plagued the company.

The tentative agreement (TA), unveiled early Sept. 8, includes a 25% wage increase over the contract's life and a variety of other pay and benefits improvements for the 33,000 IAM District 751 and District W24 employees it covers. It also ensures that any new commercial airplane launched during the agreement will be built by the employees.

Specifically, the contract language stipulates that if Boeing's board "makes a decision to formally launch any new commercial airplane model" during the contract's life, the company will place "final assembly, wing fabrication and assembly, major components (fabrication, interiors and wires), fabrication of parts and subassemblies, and delivery operations...within the union’s jurisdiction in Puget Sound and Portland." The terms would apply to any new model and all derivatives, the contract adds.

The contract requires ratification before 12 a.m. Sept. 13 U.S. Pacific time. The union membership will vote Sept. 12. The current deal expires at 11:59 PT Sept. 12. "Negotiations are a give and take, and although there was no way to achieve success on every single item, we can honestly say that this proposal is the best contract we’ve negotiated in our history," said a joint statement from the negotiating committee, IAM District 751 President Jon Holden, and W24 President Brandon Bryant.

Boeing Commercial Airplanes (BCA) President and company COO Stephanie Pope shared a video message lauding the contract's bottom-line highlights, including the "largest-ever general wage increase" and new airplane production commitment.

Pope also touched on arguably the most important aspects of the new deal: Boeing's recognition that it must have a more collaborative relationship with its frontline workers to make much-needed improvements in the safety and quality of its aircraft   "The truth is on the factory floor," Pope said. "We have to go there, and we have to listen."

The new deal, the first fully negotiated contract between the parties since a deal reached during an eight-week strike in 2008, reflects a collaborative re-set.

"The union and the company agree on the importance of working together to continuously improve the Quality Management System (QMS), Safety Management System (SMS), and Quality Inspection processes," the contract says.

Several contractual items support this goal. Among them: the union will "participate" in BCA's QMS Advisory Board as well as the Inspection Management Board (IMB) process that reviews and approves changes to inspections and tests within the QMS, the contract said. "The union representatives from the BCA QMS Advisory Board shall also serve on the board" as IMB subject-matter experts, the contract adds.

Boeing also has committed to notifying the union "as soon as practicable" of "significant" production-rate changes "and to provide a summary of the proposed rate adjustment plans prior to implementation," the contract says.

The union also will have greater input on strategic decisions through a new senior executive labor-management committee (SELMC). Members will include Boeing's CEO, BCA's top executives, and counterparts from IAM 751 and W24. The SELMC would meet "semiannually to review and discuss key elements of the business and workforce...with the mutual goal of improving the competitive position of the company."

The two sides, which have agreed to several contract extensions since the contentious 2008 deal, have been negotiating since March. While the represented workforce primarily supports BCA, it also includes employees from Boeing Defense, Space & Security, Boeing Global Services and corporate groups. The workers are located in the Puget Sound region and Portland, Oregon.

Unlike past agreements that have focused on money or job security, this round came in the shadow of an unprecedented string of company crises rooted in Boeing's ability--or, in some cases, willingness--to meet its own and broader regulatory standards. One common theme in myriad reports and audits done during the crisis: Boeing does not pay enough attention to front-line employee concerns or suggestions.

The company has pledged to change this, but new doubts surfaced following January's Alaska Airlines 737-9 door plug blowout  which again spotlighted a lack of quality control throughout the company's production processes. The accident led to major leadership changes, including former CEO Dave Calhoun's ouster.

If approved, the agreement would reflect a major win to start new CEO Kelly Ortberg's tenure. While Boeing's announcement of the deal spotlighted Pope, Ortberg has made it clear that Boeing's path back to respectability passes through its factory floors.

Among Ortberg's first actions when he took over for Calhoun in early August were visits to Boeing's key production sites. He also met with both Holden and Bryant--a rare step for Boeing's top executive.

"I shared with them my commitment to reset our relationship and reach a new contract where we can come together to build a strong future for our employees in the region," Ortberg told employees in a message after the meeting 

While Boeing's new CEO did not participate directly in the contract talks, the tentative deal aligns with his public pronouncements.