Boeing machinists agree to 777X contract on narrow vote
By Reid Wilson, Updated: January 4 at 11:24 am - Washington Post
Members of Boeingfs Machinists union demonstrate in
Seattle on Nov. 18, 2013 (Photo: REUTERS/Jason Redmond)
Members of Boeingfs machinists union on Friday voted by a slim margin to
accept the companyfs proposal of a long-term contract that will guarantee
construction of a new long-range wide-body aircraft in the Puget Sound region,
in exchange for significant wage and retirement benefit concessions.
The new contract means Boeing will build a composite wing for the new 777X
plane and will assemble the final product in its Everett, Wash., plant. Boeing
already has about 80,000 employees in facilities around the Puget Sound region,
and the new contract means the 20,000 or so who will work on the 777X will be
located in Washington state for at least the next decade.
The vote came two months after the International Association of Machinists
and Aerospace Workers (IAM) rejected an earlier offer from the company by a
two-to-one margin. Despite a proposed $10,000 signing bonus, the machinists were
furious over a provision in that version of the contract that would have moved
their retirement plans away from pensions and toward 401(k)-style savings plans.
Angry protests erupted at union halls, and one union leader tore up copies of
the contract in front of the media.
Boeing was not subtle in its response to the rejection. After the vote,
Boeing immediately began soliciting
bids from other states; about two dozen states applied, some offering major
tax breaks valued in the billions of dollars. Boeing executives told
Washington state elected officials earlier this week that another rejection
by the machinists union would guarantee that the 777X project would be located
outside Washington state.
That would have been a big blow to the statefs economy, and to its
self-image. Boeing, founded in Seattle a century ago, has been a cornerstone of
the regional economy for decades, though in recent years the company has moved
its corporate headquarters to Chicago, a key assembly line to South Carolina,
and other units to Utah, California, Missouri and other states.
Washington state officials had
estimated that the 777X line was worth about 20,000 jobs and more than $20
billion in economic activity.
After the initial contract offer, which was soundly rejected, Boeing
sweetened the deal by adding another $5,000 bonus to be paid to machinists in
2020, better dental coverage and a tweak to the unionfs wage structure. The
changes to the companyfs retirement plan remained in place.
Those minor concessions, along with the threat of losing thousands of jobs,
was enough to scare union members into voting in favor. The contract proposal
passed by a 51 percent to 49 percent margin — a difference of 600 votes, one
union leader told the Seattle
Times.
gThe impact of this agreement extends far beyond [IAM] members who voted
today,h IAM President Tom Buffenbarger said in a statement released Friday
night. gFor decades to come, the entire region will benefit from the economic
activity and technological innovations that will accompany the production of the
777X and the 737 MAX.h
The new contract also guarantees the company will produce the 737 MAX, a new
version of the companyfs most popular commercial aircraft, through at least
2024.
The vote, and Boeingfs commitment to continue building the new aircraft in
Washington state, means the company will be able to take advantage of the largest
corporate tax break in the history of the United States. The Washington
state legislature, meeting in special session last fall, passed a series of tax
breaks worth up to $8.7 billion through 2040, contingent upon construction of
the 777X staying in Washington. Gov. Jay Inslee (D) signed the tax break in
November.
The contract vote is also good political news for Inslee, who took heat for
appearing to urge the machinists to vote in favor of Boeingfs latest offer last
month. Several top union officials refused to attend the first Christmas party
Inslee threw in the governorfs mansion, a snub they said was directly related to
Insleefs comments on negotiations between the machinists union and Boeing.
Inslee kept a lower profile in the following weeks, and he made clear several
times he wouldnft publicly urge machinists to vote a certain way.
In a statement Friday, though, Inslee trumpeted the results.
gTonight, Washington state secured its future as the aerospace capital of the
world. To make that happen, the International Association of Machinists District
751 took a hard vote that demands the respect of all Washingtonians who will
benefit from having Boeing build the 777X here,h Inslee said.
gWith the work the Legislature did in November and tonightfs vote, Washington
state has shown it is the only place to build this next generation jetliner.
That legislation has important protections for taxpayers and for Machinists and
we will make sure the company keeps its commitment and that these jobs remain in
Washington state for the life of the airplane.h
Since being sworn in early in 2013, Inslee has had a rocky first year as
governor. But the Boeing contract and the companyfs commitment to keep jobs in
the state could prove a strong start to his second year in office.
gGovernors [who] deliver Boeing jobs win reelection. Period,h said one
Washington state Democratic strategist outside of Insleefs orbit.