Ortberg's honeymoon with Boeing's unions is over

By Scott Hamilton

analysis

September 24, 2024, © Leeham News: It was a short honeymoon.

Kelly Ortberg, CEO of The Boeing Co. Photo credit: Boeing.

The desire of Kelly Ortberg, Boeing's new CEO, to reshape labor relations with the largest union came to an abrupt end yesterday. That's just six weeks after his appointment on August 8 to succeed David Calhoun, whose four and two-thirds year term was marked by one failure after another.

Boeing's largest union, the 33,000-member IAM 751, gave the company a drubbing on Sept. 12 when 95 percent of members rejected what Boeing called its best wage offer ever. At the same time, 96 percent of members voted to strike at midnight. They were on picket lines when Boeing issued its best and final offer (BAFO) on Sept. 23. The offer sweetened the deal in some key areas.

But the way the offer was crafted and delivered infuriated union members, who rejected the original offer largely due to 16 years of pent-up anger and bitterness over stagnant wages, reduced benefits and the elimination of a defined benefit pension plan. The union made concessions under the threat of moving final assembly of the 737 MAX and 777X outside the Seattle metropolitan area.

In preparing and presenting the BAFO, Boeing ignored the IAM negotiating team. Two days of government-mediated talks failed. The IAM complained that Boeing refused to return to the negotiating table. (On September 13, a day after the original contract was rejected and the strike began, the company's chief financial officer, Brian West, said Boeing was committed to resuming negotiations.)

Boeing released the details of the BAFO to the media before it was presented to 751 President Jon Holden. The union later released a scathing statement rejecting the offer and Boeing's demand for a member vote by midnight Friday, September 27.

Declaration of the Union

In a detailed statement, the union said: “Let us be very clear: This is a non-negotiated offer. from Boeing. Your bargaining committee has neither discussed nor commented on this offer. We have said all along that the union would be available for direct talks with Boeing, or at least expected to continue mediated talks if the company was willing. This direct action tactic is a major mistake, is damaging to the bargaining process, and is an attempt to bypass your union bargaining committee.

“Mediation failed on Wednesday, September 18, 2024, after the company refused to make an offer that addressed our members’ priorities. This proposal does not go far enough to address your concerns, and Boeing has This proposal missed the target. With this divisive strategy they are trying to drive a wedge between our members and weaken our solidarity.” (Emphasis in the original.)

Nothing makes parties angrier than a feeling of disrespect. Seattle Newspaper Ortberg was “heavily involved in the design of the BAFO,” it was said. The union will blame him for the lack of negotiations and the way in which the offer came about.

Ortberg was criticized by the union for his initial offer, but since he had only been in office for a few weeks, there was scope to give him some leeway. However, the way Boeing handled the BAFO nullified any benefit of the doubt that might have existed.

The honeymoon period with the birth is over.

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