(Bloomberg) -- Talks between Boeing Co. and its largest union to end an almost monthlong strike collapsed for a third time, extending a shutdown of the planemaker’s key commercial manufacturing base on the US west coast.
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Both the embattled planemaker and the International Association of Machinists and Aerospace Workers blamed each other for the impasse, following two days of mediated negotiations over a previously disclosed proposal that would have hiked wages 30% and boosted retirement benefits. Boeing said it has withdrawn the offer, saying further talks don’t make sense at this time.
Boeing and leaders for IAM District 751 have been in a stalemate over pay and pensions since the union’s 33,000 members walked off the job shortly after midnight on Sept. 13.
“Unfortunately, the union didn’t seriously consider our proposals,” Stephanie Pope, who runs Boeing’s commercial airplane unit, said in a memo shared by company. “Instead, the union made non-negotiable demands far in excess of what can be accepted if we are to remain competitive as a business.”
The company’s first major strike in 16 years has taken a toll on its finances, costing Boeing $100 million a day in lost revenue by TD Cowen’s estimates. With cash rapidly dwindling while its debt load balloons, Boeing is mulling selling at least $10 billion of new stock once it knows the full extent of the financial damage from the work stoppage.
As the strike extends, Boeing is also flirting with a ratings downgrade. S&P Global Ratings said earlier Monday it is looking at downgrading Boeing’s credit grade to junk, citing the company’s growing cash needs. Moody’s said last month it’s reviewing Boeing’s investment-grade credit rating.
Both sides made blunders that angered rank-and-file members and complicated efforts to resolve the difference. The IAM local union’s leadership endorsed the company’s initial offer of a 25% wage increase over four years, well below what many members expected as recompense for repeated below-inflation annual wage rises. The offer also eliminated an annual bonus.
IAM members overwhelmingly rejected the offer and voted to strike.
Boeing later misjudged the union’s resolve, bypassing leaders to present an offer directly to workers via the media with an ultimatum that they approve it within days. The terms included a 30% wage increase over four years, reinstating the bonus and boosting the company’s contribution to workers’ 401K retirement plans.
The move backfired by solidifying support for local labor leaders, and encouraging members to dig in on their demand for more pay and better retirement benefits.
In a statement after the latest talks collapsed, the IAM said Boeing was “hell-bent on standing on the non-negotiated offer” sent directly to workers last month. The company refused to propose any further wage increases or reinstate the defined benefit pension, the union said.
“By refusing to bargain the offer, the company made it harder to reach an agreement,” the union said. “Your negotiating committee attempted to address multiple priorities that could have led to an offer we could bring to a vote, but the company wasn’t willing to move in our direction.”
(Adds Boeing comment in fourth paragraph.)
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