Angry Union

Union to Boeing: Shove That Contract Up Your New Jet


Workers assemble a Boeing 737 jet at the company’s factory in Renton, Wash.

Photograph by Mike Kane/Bloomberg

Workers assemble a Boeing 737 jet at the company’s factory in Renton, Wash.

A group of Boeing (BA) employees soundly rejected a contract offer aimed at keeping assembly work for the company’s new 777X near Seattle, setting up a potential economic bonanza for lower-cost states hoping to land the project.

The offer was rejected by 67 percent of voters from the International Association of Machinists and Aerospace Workers, which counts about 30,000 workers in the Puget Sound region. “We preserved something sacred by rejecting the Boeing proposal,” IAM District 751 President Tom Wroblewski said in a statement. “We’ve held on to our pensions, and that’s big. At a time when financial planners are talking about a ‘retirement crisis’ in America, we have preserved a tool that will help our members retire with more comfort and dignity.”

The contract angered many union members because it sought to convert their traditional pension plan to a defined-benefit system, the kind that has become common across corporate America over the past two decades. The eight-year proposal also would offer a 1 percent wage increase every other year and would have extended the period for workers to reach the top pay scale to 16 years from 6 years.

In return, Boeing was offering to keep the full 777X program, including the manufacture of the plane’s massive carbon-fiber wings, in Washington. In the past week, state legislators quickly rushed through a package of tax breaks and other incentives for Boeing, which total $8.7 billion.

The union vote also left many members infuriated with their leaders for even bringing the contract document to them, the Seattle Times reported today. “Hopefully Boeing will recognize they went too far and will come back,” Larry Brown, the union’s political director, told the newspaper on Wednesday night. “They need to build that airplane here for it to be a success.”

After the vote, Boeing said it was “left with no choice but to open the process competitively and pursue all options for the 777X.” On Thursday morning, Boeing spokesman Doug Alder said the company has no plans to resume talks on a contract with the union until 2016. If Boeing ultimately decides to move the 777X project out of Washington, he said, it wouldn’t expect to delay the scheduled 2020 delivery of the new planes.

Among the sites considered to be in contention are Long Beach, Calif., where Boeing has a major plant from its acquisition of McDonnell-Douglas that sits largely unused beyond work on military cargo jets. The Seattle Times reported this week that Boeing has also identified its plants in Salt Lake City and Huntsville, Ala., as other top choices outside the Seattle area. Boeing makes the composite tail section of the 787 in Utah and conducts much of its space work in northern Alabama. South Carolina, where Boeing has opened a second 787 Dreamliner production center, is not considered a viable option for the 777X because of the location’s heavy focus on trying to boost Dreamliner output.

Boeing also has a large site in San Antonio at the former Kelly Air Force Base. Last week, Texas Governor Rick Perry, who has traveled the country seeking to poach jobs from other states, touted his state on Twitter (TWTR) as a prime location for the 777X program:

Alex Pietsch, director of Washington Governor Jay Inslee’s Office of Aerospace, holds out hope that Boeing and the union will restart talks about a possible new contract. “We hope in time, when things calm down a little bit, those discussions can happen again,” he says.

Bachman is an associate editor for Businessweek.com.

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