Boeing CEO delivered ultimatum to Machinists. Union leaders believe him

New Boeing CEO Kelly Ortberg this week intervened directly in the negotiations with the Machinists and personally delivered a tough message: If striking union members on Monday reject the company’s latest offer, the next contract proposal will be less generous, with potentially serious consequences for the future.

“We can’t just keep giving more,” was Ortberg’s position, Machinists union leader Jon Holden said Friday in an interview. “The next offer will be regressive.”

While Boeing did not specify what would be taken away from Thursday’s offer if it were to fail, Holden said that could mean cutting any number of gains, including canceling a commitment to build the next airplane in the Puget Sound region, backing away from a 38% wage increase or losing a 1% decrease in health care costs.

“They said anything’s on the table,” said Holden, president of Machinists union District 731. “They are looking at other options.”

The Machinists went on strike Sept. 13, idling Boeing’s assembly plants in Renton and Everett as the plane-maker’s cash reserves dwindle. Union members rejected two prior offers, believing they could win greater concessions on pay and retirement benefits from Boeing.

Ortberg’s blunt message convinced Holden and his negotiating team that “we’ve got the most we can get.”

They have recommended that the union’s 33,000 members accept the offer in Monday’s vote, which would bring the strike to an end after 54 days.

Boeing’s proposal is an incremental improvement on its last offer: an additional 3% general wage increase to achieve that 38% raise over four years.

“These are life-changing wages,” Holden said.

“We’ve never received this increase in pay in our history,” he added. “From 2002 to 2024, if you just add up the general wage increases, it equaled 31.5%.”

“Our bargaining committee believes that it’s time to lock in this win,” Holden said. “We feel strongly that this is a victory.”

Initial reaction from the rank-and-file

On Friday, some workers were heeding Holden’s warning. 

Sitting down for an interview with The Seattle Times, Holden had just finished a Zoom call with more than 500 members who questioned him closely about the new offer and his recommendation to accept it. He had told them about the risk of losing the earlier gains.

The response from those on the call, he said, “led me to believe … they’re looking to accept it.”

For sure, there are still Machinists unwilling to bend.

Rob Davis, a 13-year Everett employee, said he’s still a no vote and dismissed the union leadership as “a finger puppet of Boeing.”  

Andrew DeFreese, an equipment operator in Everett, said Friday he’s also sticking with his no vote. He wants to hold out for more paid time off and quicker steps to progress through the wage scales.

But for others, the loss of income is biting hard.

One worker, who asked to remain anonymous because of the sensitive nature of the vote, told The Seattle Times he firmly rejected the offer in the previous vote but this time is wavering. 

“I’m leaning more toward just accepting at this point, out of fear of many things,” the worker said.

The financial strain is starting to weigh on his family and he worries that he can’t remain out of work much longer.

While he had hoped to see more movement on the company’s wage offer, he also worries that if this offer is voted down, the union risks losing more than it had gained. 

“I think the company is in a better position to wait us out,” he said.

Carlos Del Villar, an aircraft testing technician in Renton, said opinion is “divided between people that want this to end and hopefully recover from these losses sooner than later, and the workers that will keep holding the line until a pension is reinstated.”

At Boeing for 2½ years and having started with a salary of $20 an hour, Del Villar said he was only able to save a limited amount before the strike began. He has taken a temporary job with a staffing agency to make ends meet. 

He said the 38% wage increase in the contract offer on the table now is close enough to the original union demand for 40% to earn his yes vote.

Holden said many Machinists, especially the longer-serving ones, have saved and prepared for a strike.

“Many of our members can go much longer,” he said. “Others might not be able to.”

While the union could continue the strike, “you risk the company going regressive. You risk people being in real hardship.”

Another Machinist, who asked to remain anonymous because of the sensitivity of the strike, said Friday he doesn’t want to get a second job to scrape by and is ready to get back to work.

He’s also worried about the possibility of layoffs if the strike continues. He said he has decided he’ll go to work next week, no matter the vote outcome.

Boeing plays hardball

Ortberg’s only previous direct involvement in the Machinist contract talks was in September, when he personally added to the initial offer his commitment that Boeing would build its next new airplane in the Puget Sound region.

His threat that the negotiations could go backward if Monday’s vote is a rejection came after Boeing had earlier walked out on the mediation effort facilitated by acting Labor Secretary Julie Su.

When those talks convened Tuesday in Seattle, Holden said the union pushed for improvements on the last offer, rejected Oct. 23, while the company asked for a revote on the same offer with no changes.

“We weren’t going to do that,” said Holden.

At that point, company and union representatives were in separate rooms with mediators shuttling between them. Holden said the management team grew frustrated with the union proposals and left the building.

Holden said he appealed to Su to salvage the talks. After she made a direct plea to Ortberg, Boeing returned to the mediation and eventually offered the additional 3% wage increase — with the threat attached if it was rejected.

Holden said the company was totally unwilling to budge on restoring the traditional pension it forced the Machinists to give up 10 years ago.

The mediators and the U.S. Labor Department brought up alternative retirement plans that provide a defined benefit but don’t saddle the company with unknown, unfunded liabilities.

“There was no traction,” Holden said. “We just didn’t get there.”

That left the union with a stark choice.

Speaking with The Times, Holden revealed for the first time that the reason he had recommended the company’s first offer of a 25% wage increase over four years — which initiated the strike with a 95% rejection vote on Sept. 12 — was because Boeing made the offer conditional on his recommendation.

“They weren’t going to give it unless I recommended it,” he said.

On Thursday, this was again a condition on the improved offer. But Holden said the motive for his decision this time was deeper.

It was the recognition, he said, that “this is the inflection point … in the strike, where we could continue to stay out, but I can’t guarantee that we would not go backward.”

With that looming risk, Holden shook hands with Ortberg and agreed to recommend acceptance.

“I’m optimistic that we’ve done everything we can,” Holden said. “We placed a great offer in front of our members, and it’s in their hands.”

Financial pain

Boeing’s recent share sale did net the company more time. It raised $21.1 billion last week, selling additional shares in the company to shore up its balance sheet and stave off a potential credit rating downgrade. 

Workers, on the other hand, are burning through their own savings as they remain on the picket line. Analysts from Jefferies calculated Friday that the average “financial pain” for workers is $10,400 in lost wages.

That’s nearing the $12,000 ratification bonus on offer and, for some workers, the $9,900 that they would gain in wage increases in the first year of the contract.

With the big capital injection, the analysts wrote Friday that Boeing is “likely in a stronger negotiating position.” 

The company’s new offer, in addition to not restoring the defined benefit pension, also didn’t increase the company’s contribution to the 401(k) retirement plan from the previous offer. 

Instead, it rolled into one the previous offer’s $7,000 ratification bonus and one-time $5,000 contribution to the 401(k), allowing workers to choose how to split the $12,000 payment between their paycheck, retirement plan or both. 

If the contract offer is accepted, Machinists can return to work as early as Wednesday. They would have to return to the factory by Nov. 12. 

“We make a recommendation, but we put the power in our members’ hands,” Holden said.

“I hope that they can accept this as a victory and move forward,” he added. “We’ll see on Monday.”