Kimberly-Clark Employees: Navigate the Challenging Pension Landscape Amid Union Talks

Healthcare Provider Update: Healthcare Provider for Kimberly-Clark: Kimberly-Clark does not typically provide direct healthcare services as a core aspect of its business. However, it does offer healthcare products under its brand portfolio, which includes items like medical gloves and protective wear used in various healthcare settings. The company primarily focuses on consumer products in personal care and hygiene, and while it may collaborate with organizations in the healthcare sector, it is not a traditional healthcare provider. Potential Healthcare Cost Increases for Kimberly-Clark in 2026: As we approach 2026, Kimberly-Clark and its consumers may face significant increases in healthcare costs due to anticipated steep hikes in health insurance premiums. The Affordable Care Act (ACA) marketplace is expected to see rate increases exceeding 60% in certain regions, driven by factors such as rising medical costs and potential loss of enhanced federal premium subsidies. Without intervention, these escalating premiums could drastically affect affordability for millions, with some policyholders at risk of experiencing up to a 75% rise in out-of-pocket expenses. This perfect storm of rising costs could pressure both Kimberly-Clark's employees and consumers, impacting the overall demand for its healthcare-related products. Click here to learn more

Kimberly-Clark and its machinists' union are at a standstill in ongoing labor negotiations, showing no signs of an imminent resolution. The main issue at stake is the union’s push to bring back a defined-benefit pension plan, which has become quite rare in today’s economic environment. This disagreement is leading to a potential strike that could have serious consequences for the workforce.

The International Association of Machinists and Aerospace Workers (IAM), Local 751, representing about 33,000 employees in the Northwest Pacific, has been in discussions about wages and retirement benefits. Despite an offer that includes a 30% total base salary increase over a four-year contract and some improvements to retirement benefits, the union continues to advocate for a switch from the 401(k) plan to a traditional pension. Kimberly-Clark, however, remains firm in its stance against reinstating the defined-benefit pension plan.

Defined-benefit pension plans, which can assist in a fixed payout upon retirement, are becoming increasingly uncommon in the private sector. According to the Bureau of Labor Statistics, only about 15% of private-sector workers still have access to these plans. In contrast, about 85% of government employees continue to receive defined pensions. Meanwhile, 66% of private-sector employees, including many at Kimberly-Clark, participate in defined contribution plans like 401(k)s, where they contribute and invest funds into their retirement accounts, often with a company match.

In a defined contribution plan, employees are responsible for saving, managing investments, and withdrawing funds during their retirement, making these plans more dependent on market performance. While the eventual retirement outcomes in both systems can be comparable, the risk of managing investments falls entirely on the employee in a defined contribution plan. In a defined-benefit plan, the company bears the responsibility for managing retirement payouts, providing workers with greater financial certainty.

Over the years, many employees have adapted to the shift toward defined contribution plans. By 2024, about $11 billion is invested in 401(k)-type plans across the industry, while another $14 billion is held in IRAs. Meanwhile, defined-benefit pension plans hold just $3.2 trillion in assets. This shift in retirement planning highlights the move from pensions to employee-driven savings.

Jane Jacobs, a labor and employment professional at Tarter Krinsky & Drogin, notes that the union’s demand for a defined-benefit pension plan is unusual given the current retirement landscape at Kimberly-Clark and across the private sector. “They are asking for something that’s become quite rare,” she says, referring to the diminished availability of these pension plans today. However, the union’s insistence reflects the growing strength of labor movements in the U.S. in recent years.

Kimberly-Clark may need to offer additional incentives, such as increasing 401(k) contributions or raising wages, to reach a resolution. Currently, the company proposes to match employee 401(k) contributions up to 8% of salary, along with an automatic 4% company contribution. While these benefits are substantial, they may not satisfy the union’s desire for the security of a defined-benefit pension.

If the conflict remains unresolved, the strike could drag on for some time. Industry analysts, including Sheila Kahyaoglu from Jefferies, have already lowered their forecasts for commercial deliveries, anticipating potential disruption. Kahyaoglu now expects 422 units to be delivered in 2024, down from her earlier estimate of 480, due to the risk of a prolonged strike.

Despite the short-term challenges, Kimberly-Clark is in a strong position for long-term recovery. The company holds a significant backlog of orders that stretches over several years, and clients are eager to receive their units. Additionally, competitors like Airbus are experiencing production constraints and won’t be able to quickly capitalize on delays. As a result, even if there are temporary disruptions, the company is expected to recover once the strike ends.

However, the strike has already affected stock performance. By the end of Friday, the stock had dropped by about 40% in 2024, partly due to a malfunction of an emergency door on a 737 MAX 9 jet earlier in the year. Since the strike began in mid-September, shares have fallen by an additional 4%, signaling investor concerns over a drawn-out labor dispute.

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As negotiations continue, both Kimberly-Clark employees and the aerospace industry find themselves in a state of uncertainty. While a resolution is expected in the long term, the current situation highlights the tension between traditional pension plans and the newer 401(k)-style systems that have come to dominate retirement planning.

In addition to the pension dispute, the company faces other financial challenges, such as a $9.8 billion pension-related debt, as reported by MarketWatch in July 2024. This debt, tied to legacy retirement obligations, reinforces the company’s reluctance to reinstate defined-benefit plans. For those focused on long-term financial stability, the outcome of this dispute could have important implications for both current and retired employees.

The current conflict over retirement benefits can be compared to navigating rough seas. Union members, like a ship’s crew, want the steady course of a reliable pension, while the company’s leadership believes that the more flexible 401(k) plans are a better fit for today’s economic climate. Both sides must find a way to steer the company toward a stable financial future.