Union agreement with Boeing includes important commitment to Seattle and signals future

With Sunday's preliminary collective bargaining agreement, Boeing's new CEO was able to score another success, but one detail stands out in particular: the commitment to build the company's next aircraft in the Seattle area.

Kelly Ortberg has been at the helm of Boeing for a month and has already faced difficulties such as the Starliner fiasco and a problem discovered during certification tests for the 777X.

But he appears to have avoided a crisis by averting a potential strike by the International Association of Machinists and Aerospace Workers, which represents more than 33,000 Boeing employees.

The agreement, which provides for a general wage increase of 25%, still has to be ratified by union members in a vote on Thursday.

If the contract is approved and Boeing begins building a new commercial aircraft within the four-year term of the contract, it will be built in the Seattle area – a crucial victory for the union.

“We can honestly say that this proposal is the best contract we have negotiated in our history,” union leaders said in a statement.

Wall Street also seemed to support the agreement: Boeing's share price rose 4 percent in premarket trading.

Since 2001, Boeing had moved away from its historic headquarters and production site in the Pacific Northwest.

This year, the company moved its headquarters to Chicago and in 2022 to Arlington, Virginia. Since 2021, final assembly of the Boeing 787 Dreamliner program has taken place in South Carolina.

But after Ortberg took over as CEO on August 8, he told employees that he wanted to be based in Seattle.

“Because what we do is complex, I firmly believe we need to get more aligned with production lines and development programs across the company,” he added.

In the wake of the 737 Max crisis, which led to the downfall of Ortberg's two predecessors, critics questioned the distance between the company's CEOs and the Seattle-area factory where the aircraft is assembled.

For some, this was evidence that Boeing had placed more emphasis on profit and production speed than on the quality of its aircraft – a mistake that former CEO Dave Calhoun admitted.

In February, a month before Calhoun announced his resignation, the Seattle Times reported that Boeing's board of directors had rejected a shareholder's offer to move the company's headquarters back to Seattle.

“Boeing has become an industry leader in commercial aviation because of close collaboration between manufacturing, engineering and management,” the shareholder said in his proposal.

Ortberg's Seattle office may not be a full-fledged move of the company's headquarters, but it sent the right signals to employees during a stressful time.

The prospect of the next commercial aircraft program being located there implies a return to manufacturing quality and a reorientation towards quality rather than speed and maximum profits.