Taking a stand for good middle class jobs, rank-and-file members of the International Association of Machinists (IAM) on Nov. 13 soundly rejected a long-term contract proposal by Boeing Corp. that included large concessions on pensions, wages, and overall workplace conditions.
In exchange for all the takeaways, Boeing offered a $10,000 signing bonus, and it sweetened the early retirement calculation for those close to retirement. The company also gave a commitment to build its new 777X aircraft in Washington, though that guarantee wasn’t iron-clad in writing in its proposal.
The 8-year contract proposal was negotiated secretly, and involved Washington state politicians.
The vote to reject the proposal was 67 percent in Everett, Washington, and 78 percent at the Boeing parts plant in Portland, Oregon, where 1,290 workers are members of Machinists Lodge 63. Some 30,000 workers in Everett are members of Machinists Lodge 751.
The turnout was one of the largest to ever vote a contract, union officials said.
Machinists still have three years remaining on their existing contract. That pact also was bargained secretly — and presented to workers in mid-contract (December 2011). The deal included a signing bonus, wage and pension increases, and a commitment from Boeing to build the 737 MAX in the Evergreen State. In return, workers agreed to pick up more of the cost of their health insurance premiums, and the union agreed to drop a high-profile National Labor Relations Board (NLRB) complaint it made after Boeing relocated a Dreamliner 787 assembly line to a nonunion plant in South Carolina. The NLRB found Boeing did so in retaliation against workers for striking in 2008. It’s illegal to threaten or penalize workers who engage in concerted activity.
Union members accepted the deal — which extended their contract to September 2016 — by a 74 percent margin.
This time around, IAM leaders said the talks were more like an ultimatum than a negotiation. Boeing officials said that if workers rejected their offer, the company would look elsewhere to build the 777X airliner.
According to Labor Notes, staff and business agents of Machinists District Lodge 751 initially were divided on the proposal, voting 18 to 10 not to present it to members, but they were overruled by the international.
The threat of leaving Washington prompted Democratic Gov. Jay Inslee to call a special session of the Legislature, which in three days — and just days before the union vote — granted the company a $8.7 billion tax incentive package through 2024. The incentive includes money for workforce training and a streamlined permitting process. It’s the nation’s largest-ever state tax subsidy for a private corporation.
Nevertheless, rank-and-file Machinists were angry to be presented with such a complex new collective bargaining agreement — not a contract extension as it originally was presented — under such pressure by public officials and the company to accept it.
As Jeff Johnson, president of the Washington State Labor Council explained, workers felt “extorted” by Boeing’s offer.
Specifically, in exchange for a promise of keeping production in Washington, Boeing wanted to convert the defined benefit pension system as of Nov. 1, 2016, to a 401(k)-style savings plan (this from a company whose CEO is on track to receive a pension worth more than $250,000 per month). It wanted to raise the share of health care costs workers paid by more than 30 percent over the life of the contract. It would have required at least 16 years for a newly hired Machinist to move from the bottom of the pay scale to the top (it currently takes six-and-a-half years). And it would have limited wage increases to 1 percent every other year to 2024. Maximum hourly pay tops out at $35.25.
The modifications reportedly would have saved Boeing about $2 billion over the eight-year contract. The company recently posted historically high quarterly revenue and profit figures. And shortly after the contract vote, Boeing announced it had pre-orders of 259 777X aircraft worth more than $95 billion.
The Seattle Times reported that Boeing is currently soliciting proposals from about 15 U.S. locations for bids to build the 777X. The list of sites includes Long Beach, California; Salt Lake City, Utah; Huntsville, Alabama; San Antonio, Texas; St. Louis, Missouri, North Charleston, S.C., and Everett. Boeing officials said proposals are due back in mid-December and the company expects to make a decision sometime early next year.
Production on the 777X is expected to begin in 2017, and the first test flight is scheduled for 2019, with delivery of the first airplane expected in 2020.
On Nov. 18, several hundred union and community members turned out in the pouring rain at Seattle’s Westlake Park to support and thank the Machinists members, and to call on Boeing to make the smart, rational business decision of building the 777X in Washington.
Speaking on behalf of a group of Machinists attending the rally, IAM Lodge 751 Business Representative Jon Holden expressed gratitude for the community support. “Today we are all Machinists in this struggle,” Holden said. “We are proud to stand shoulder to shoulder with you to protect the things achieved (in previous contracts). Those who build the 777 today are the key to the 777X’s future success. Our quality, reliability and productivity are second to none. We are proud to stand with you because truly your fight is our fight, and our fight is your fight.”
WSLC President Johnson said, “No one should interpret this vote as an indication that Machinists don’t want Boeing to expand in Washington state by manufacturing the 777X and the new composite wing here at home. These Machinists are proud, highly skilled, dedicated workers who built Boeing’s reputation, profitability, and market share. They simply want a fair shake for the work that they do.”
On Nov. 22, the Coalition of Unions at Boeing (CLUB) penned an open letter stating they are ready to meet the challenge of designing and manufacturing the 777X on time, within budget and without growing pains.
“Every successful Boeing commercial aircraft was designed, engineered, manufactured, protected and delivered by our members,” they wrote. “From the Teamsters who transport the parts, SPEEA members who design, engineer and deliver aircraft, Machinists who skillfully manufacture the planes, Operating Engineers who maintain our facilities, Industrial Fire Fighters who protect our plants and Security Guards who protect the people and our trade secrets, union-represented Boeing employees in Washington state and other legacy locations are the proven path to success.”
Industry analysts agree that Washington will be a tough competitor. The state has a large and experienced aerospace workforce and a favorable geographic location, as well as the tax incentive package already in place. [Boeing is still pressing the governor to call a second special session to pass a $10 billion transportation package that the company favors.]
“From a strict industry/business/economics/common sense standpoint, the alternatives are seriously inferior. Washington State offers big advantages,” wrote aerospace analyst Richard Aboulafia in his monthly newsletter for the Teal Group Corp.
Aboulafia notes that final assembly labor costs are “a small fraction” of the total cost of building a jet.
“Giving workers some of what they want would have a negligible impact on competitiveness, particularly since it would reduce costs and mitigate risks associated with moving the line. If management won’t compromise, that has less to do with economics and more to do with personal distaste,” he wrote.
Aboulafia gives Everett an 89 percent chance of winning the 777X. He gives North Charleston, S. C. — “the only alternative site that makes any sense” — a 10 percent chance of landing the work.
(Editor’s Note: David Groves of the Washington State Labor Council’s The Stand contributed to this report.)