Boeing Vote Goes to the Wire


Workers, faced with an 11% raise as well as givebacks, hold the key to whether Boeing takes a hit on 787 production

Votes on a Boeing (BA) contract and a possible strike won't be counted until late on Wednesday, Sept. 3. But already the theatrics have been fairly rich.

Led by about 60 motorcycle-riding members of the International Association of Machinists, some 1,500 workers marched out of Boeing's Renton (Wash.) plant on their lunch hour Wednesday and paraded a half-mile to the union hall to vote, an IAM spokeswoman says. A similar march, with 7,000 workers, took place at a bigger facility in Everett, Wash. She adds that people have been marching around their plants for the last couple days.

The votes are crucial for Boeing, which could lose millions of dollars a day in deferred revenues if production has to halt on its new 787 Dreamliner (BusinessWeek.com, 8/29/08) plane as the result of a strike. Opponents of Boeing's contract offer are riled about givebacks that are being demanded by management in language that could shift some work to subcontractors and would shift some health-care costs to employees.

On the first point, workers are saying, "better wages and benefits aren't any good to me if I'm not on the payroll to collect them," says IAM spokeswoman Connie Kelliher. On health care, they argue similarly that new provisions that would require beneficiaries to pay higher premiums, plus hit them with such new or higher charges as a $250 bill for each hospital visit, will fast erode any gains in pay.

Looking for More

The union leadership, in urging rejection of the contract, argues that management should not be seeking any givebacks from the workers since it has been logging record profits. Boeing had net income of $4 billion last year. And while the company has offered wage hikes of 5%, 3%, and 3% for each year of the three-year deal, the union wants a deal that would be somewhat richer. Instead of annual raises that add up to 11%, it wants hikes adding up to 13% over the period. The average machinist earns about $56,000 a year.

The bottom line, though, will come when vote-tallying is completed for some 27,000 workers. Most didn't seem to be taking part in the marches but were voting quietly. Management said early Wednesday that it was too soon to read the tea leaves. Timothy Healy, a Boeing spokesman, says he doesn't know whether the marchers reflect a real groundswell or just some vocal individuals.

It will take a "yes" by two-thirds of those voting to authorize a strike, but only a simple majority to O.K. the contract. Management has sought to spur on a majority vote for the deal with a $2,500 bonus for each machinist if it passes on Wednesday.

Saving for a Strike

The last strike at Boeing, in 2005, lasted about four weeks. It brought commercial plane production to a standstill. The IAM claims workers are well-prepared for a shutdown, with over $100 million in the union strike fund, which would distribute about $150 in benefits each week to every striking member. The workers, who typically have been putting in lots of overtime because of Boeing order backlogs, have been setting aside money for a strike at least since July, when they had a preliminary vote to authorize a strike, the spokeswoman says.

A walkout could cost Boeing an estimated $100 million to $120 million a day—though such estimates are based on deferred sales rather than permanently lost ones. More important, a stoppage could jeopardize plans to bring out the new 787 Dreamliner before yearend. Delays of over a year in delivering that plane already have cost Boeing some $2 billion or more, some analysts say. Combined with Boeing's loss on a key Air Force tanker contract, fears of a global economic slowdown, and a general selloff in the stock market, those 787 delays have contributed to a loss of nearly $30 billion in stock market value.

If the union walks out at 12:01 a.m. on Thursday, it would be up to management to seek a renewal of bargaining, the IAM spokeswoman says. At this point, Boeing is standing by its final offer, made late last week. (Here is some raw video footage posted by a local TV station of the Everett vote march.)

Joseph Weber is BusinessWeek's chief of correspondents, based in Chicago.

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