No pensions, no planes!

The Boeing strikers voted, by a 64% majority, on October 23 to reject the company’s latest contract proposal. This is a significant development in the most important workers’ struggle in the country today. This article will look at the details of the rejection.

The crisis at Boeing

Some 33,000 International Association of Machinists Lodge 751 members have been on strike since September 13. Boeing is well known as the nation’s premier airplane manufacturer. Boeing has lurched from one crisis to another over the past several years. The company is now estimated to be losing a billion dollars a month. Its public standing is at a low point following a highly publicized series of safety failures. So far, new CEO Kelly Ortberg has not been able to turn any corners. Ortberg is obviously greatly concerned with the prospects of further declines in Boeing’s credit ratings. Perhaps the nadir of the aviation giant’s fortunes was the recent decision to cut 17,000 positions, about ten percent of its total international workforce.

The business press has gone as far as to speculate on future divisions of the company, Chapter 11 bankruptcy, or a federal bailout. These are quite probably panicky exaggerations, but they show the seriousness of the current situation.

The contract rejection

This then was the context in which the October 23 contract ratification vote took place. This was the third proposal presented by management to the union. The first one was rejected by a membership vote of 94.6% on September 12. The union leadership said that they thought this offer was the best that could be achieved short of a strike. The second company offer was presented directly to the media and union membership attempting to bypass the union’s bargaining team on September 23. Management also demanded a rapid response by the union. The union saw this method of functioning as unacceptable and therefore did not take the proposal to a membership vote. The bargaining team did not make a proposal for or against the latest October 23 offer.

The details of the rejected contract are quite straightforward.

35% wage increase over four years.
No return to a defined benefit pension plan.
Management would contribute the amount of 4% of each worker’s pay to a 401(k) plan.
Management would match worker contributions to the 401(k) up to 8%.
Management would make a one-time $5,000 contribution to each worker’s 401(k).
A $7,000 signing bonus.
Restoration of annual performance bonuses of at least 4%.

There are two central issues in the bargaining process. The first is obviously wages. The second is the restoration of a defined benefit pension plan. This requires a little explanation. In a defined benefit plan, the regular payment to the retiree is guaranteed. Pension funds are invested in the stock market. If the market declines, there is no impact on a defined benefits pension recipient as their amount is already guaranteed.

The alternative is called a defined contribution plan. In this, the employer agrees to give a certain amount each month to be invested in the worker’s retirement plan. If the market goes up, then the amount of the retirement payment would increase. If the market goes down, then the payment would also decline. The worker has to take that risk. That is why workers dislike this type of plan. American employers have been attempting to move all workers to defined contribution plans for years. Today, only 15% of private sector workers still have a defined benefit plan (traditional pension). It’s easy to see why the Boeing workers are so insistent on demanding the reinstatement of their plan.

Lessons for the labor movement

One, effective union negotiators have long understood that one should never agree to take a provision out of the contract. Once that clause is out, it will be extremely hard to get it back in. The IAM made the concession of agreeing to the removal of the defined benefits plan in 2014. Trying to reinstate the plan is one of the key stumbling blocks to reaching a contract today.

The union should be wary of a possible management tactic. The company could well propose some kind of a defined benefit plan that would contain quite low benefits. In this way, the employer could agree to one of the union’s key demands while still making low payments to the workers’ pensions.

Two, the second lesson is don’t be fooled when the company says an offer is its “last best and final offer”. This management tactic makes its proposal sound very final and intimidating. In fact, bosses make subsequent improved offers after a “last best and final offer” the whole time. Boeing made another proposal which was better for the union only a few weeks after its supposed final offer. It’s the latest example that shows why we shouldn’t fall for an old management trick.

Three, maintain union unity. IAM Lodge 751 has its work cut out for it. First, 94.6 % of workers rejected management’s initial proposal. Now, 64% rejected the third one. This is a 30% decline. It means about one in three workers would like to settle and return to work. That’s a serious number in a strike that’s already been going on for a month and a half. There have been reports of angry dissension inside the union. The central leadership around Jon Holden has rightly been calling for unity and common purpose inside the union.

Four, we should remember legendary longshore leader Harry Bridges’s famous statement, “The most important word in the language of the working class is solidarity.” Today, that solidarity needs to be built for the 33,000 Boeing workers who are showing that class struggle is not just possible, it’s the only way.