Boeing Labor Contract, Including 401(k) Match Boost, Approved by Workers

Union factory workers at the Boeing Co. voted to accept a new labor contract on Monday, ending the strike that lasted more than seven weeks and caused Boeing to shut down production of most of its passenger planes.

Machinists voted 59% in favor of the new contract. Boeing will now be able to resume production.

While the union members rejected Boeing’s last two proposals, in part because the company would not restore the union members’ pension fund, the International Association of Machinists and Aerospace Workers District 751 President Jon Holden endorsed the latest contract offer and argued that it is time to “lock in gains.”

“During every negotiation and strike, we must continually evaluate where our leverage stands going forward,” Holden said in statement. “We believe that we have secured one of the strongest contracts in the aerospace industry.”

The new contract offer includes a 38% pay raise over the next four years, a $12,000 ratification bonus and a 100% 401(k) match, up to 8% of pay. This is a slight improvement over the previous contract, which proposed a 35% rise in wages.

It does not include a restoration of the workers’ pensions, but Boeing is offering a $215 per year pension multiplier for those vested in the Boeing Co. Employee Retirement Plan. Boeing froze its pension plan in 2014.

The ratification bonus combines the previous $7,000 ratification bonus offer and the $5,000 lump sum contribution into workers’ 401(k) plans. Members would be able to choose how the total bonus amount is received—in a participant’s paycheck, as a contribution to their 401(k) or a combination of both.

Boeing said average annual pay for machinists is $75,608 and would rise to $119,309 in four years under the latest offer.

Acting Secretary of Labor Julie Su has been involved with the negotiations in Seattle and said in a press briefing that the first-year wage increase in the new contract is more than what the union’s members have received in recent years combined. She said it is a “sign of collective bargaining working.”

According to S&P last week, Boeing’s sale of $24.3 billion in stock and other securities will cover upcoming debt payments and reduce the risk of a credit downgrade. However, S&P found that Boeing has limited flexibility to absorb further pressure on its cash flow generation that would delay improvement in its credit measures.

Because the contract was approved, workers must return to work by Tuesday, November 12, according to the union.