Originally published December 7, 2011 at 9:00 PM | Page modified December 8, 2011 at 2:55 PM

Big day at Boeing: Contract flies

Both union and company leadership are portraying the deal as a watershed moment — a complete break with the distrust and hostility of the past that should transform future relations between Boeing and its Puget Sound-area production workforce.

Seattle Times aerospace reporter

Landmark agreement

The deal extends the current contract by four years, to September 2016.

Labor relations: Both sides commit to "a new working relationship" with common goals that include sustaining and growing well-paid union jobs, reducing costs and increasing productivity to deliver airplanes at competitive prices.

Job security: Renton gets final assembly of the 737 MAX, with parts fabricated in Auburn and Frederickson. Boeing will reduce the number of nonunion supplier employees performing work at the widebody plant in Everett. And if the Wichita, Kan., defense plant closes, the military-systems installation work on the Air Force tanker will move here.

NLRB case: The union will inform the government that its grievance with Boeing over the placement of work in South Carolina is resolved. With that settlement, the National Labor Relations Board will likely drop the case against Boeing.

Economics: A signing bonus of $5,000 paid upon ratification. Wage increases of 2 percent each year of the contract, plus a new incentive plan that could add bonuses as high as 4 percent each year. The pension multiple is increased each year by $2 per year of service, reaching $91 in 2016. Union members' health-care costs increase across the board.

Source: IAM

Machinists Boeing Proposal

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Boeing's Machinists voted overwhelmingly Wednesday to approve the deal announced a week ago, providing an immediate economic boost and the prospect of aerospace job security in the Puget Sound region.

The vote was 74 percent in favor, sealing five years of labor peace for Boeing by extending the current Machinists contract to September 2016.

In that period, Boeing plans to pump out jets at unprecedented rates. Beyond that, the deal commits Boeing to build the new version of its single-aisle jet due to enter service in 2017 — the 737 MAX — in Renton.

Last month, a report commissioned by Gov. Chris Gregoire estimated that 8,000 direct jobs and another 12,000 indirect jobs in Washington state were at stake with the MAX decision, as well as $500 million a year in tax revenue.

The yes vote is also expected to end the National Labor Relations Board case against Boeing, as the union said it would withdraw its complaint and the NLRB has signaled it will then drop the charge.

At the announcement, Tom Wroblewski, Local 751 district president of the International Association of Machinists (IAM), said his members had "passed their vote for jobs, for their future, for the future of this community and for the future of Washington state."

Mark Blondin, the IAM's national aerospace coordinator, said the result is "good news for working families here in the Northwest."

"Boeing in landing the 737 MAX here in the Northwest is acknowledging we have the deepest pool of high-skilled aerospace workers in the country."

In a phone interview from Luxembourg on Wednesday night, Boeing Commercial Airplanes chief Jim Albaugh compared the ratification of the agreement to days when he's watched the first flight of an airplane or the launch of a new rocket.

"Today is one of those days," Albaugh said. "We've changed the way we are going to work in Puget Sound. It's a watershed event."

"There's been distrust that's gone back decades," he said. "This is a new chapter."

In a message to all employees, Albaugh said the contract "demonstrates that even now, in a nation too often polarized and mired in disagreement, people can come together in good faith and find a way forward."

Both union and company leadership are portraying the deal as a defining moment — a complete break with the distrust and hostility of the past that should transform future relations between Boeing and its Puget Sound-area production workforce.

As his members voted Wednesday, Wroblewski explained the stark pragmatism that led the union leadership to the historic accord.

The trigger was Boeing's decision in 2009 to place the second 787 assembly line in North Charleston, S.C., instead of Everett.

Wroblewski said although there seemed to be no good business case for building the 737 MAX anywhere else but Renton, "I don't want to take that gamble, because of what I saw on the 787."

"Knowing what they did in South Carolina, it's time for us to understand that if it's (Boeing's) intention to leave here, it's up to us to make the change, to see if we can alter the future and make sure they stay here in Washington state," said Wroblewski in an interview at the union's South Park headquarters.

He acknowledged that in the agreement ratified Wednesday, Boeing makes no commitment to build future new airplanes in Washington.

Yet he says he thinks the new relationship can secure those future airplanes, too.

"The days of them saying, Puget Sound will get to build every airplane — that's over. The company has told us they will put future (airplane) programs up for competition," said Wroblewski. "But if we have laid the groundwork with a five-, six- or seven-year relationship here, where we've been working together, ... when it comes time to bid on that next airplane ... I believe that will give us a leg up in the competition."

Albaugh said that's the right approach.

"We have five years to build upon what's been started today," Albaugh said. "Over the next five years, we can find a lot more common ground."

The landmark agreement emerged suddenly from secret talks that began in earnest in mid-October, almost a year before the current contract was due to expire.

Boeing sales chief Ray Conner, a vice president who started out as a Machinist and who went out on a 45-day strike soon after he joined the company in 1977, was one of the main negotiators for management.

The outcome is a remarkable turnaround for both the union and the company after the bitterness that flowed from the South Carolina decision, which led directly to the NLRB charge against the company.

Boeing internal documents released as a result of legal discovery in the NLRB case showed the company had a goal of reducing the union's leverage and "rebalancing an unbalanced and uncompetitive labor relationship."

With the deal approved Wednesday, management appears to have swung back toward accommodation with the union.

One factor pushing management in that direction is the pressure on Boeing to dramatically increase production and to avoid work stoppages.

Another strike was certainly a risk if union relations had continued along the usual trajectory toward a showdown when the current contract was up next September.

In an internal presentation to the Boeing board just two days before the 2009 South Carolina announcement, Albaugh listed as one of the risks of the Charleston decision: "a 'payback' strike in 2012."

In the intervening two years, management also got to see some of the value added by the union and its experienced workforce here.

The IAM played a crucial lobbying role in winning the Air Force tanker for Boeing in February.

And its members helped fix enormous problems so that Boeing could finally deliver the first 787s and 747-8s this year.

"I truly believe that the company now sees the value in this skilled workforce," Wroblewski said.

He said the two sides will go forward looking toward a "shared destiny," with profitability for the company and jobs for the workforce as common goals.

"It's a leap of faith on the company's part," said Wroblewski. "It's a leap of faith on our part."

Not all IAM members were on board.

Jim Levitt, a 33-year veteran Machinist, said he voted against the agreement and is highly skeptical of the touted "new relationship."

"Boeing says 'I love you, I'll marry you. But if you don't sign this prenup in seven days, I'm leaving town,' " said Levitt.

"Given the history, and the barely disguised threat to pull another 787 with the 737MAX, you have to excuse us for not feeling the love."

But the majority of union members voted to support the deal, with the younger generation of newer hires most enthusiastic as they look to the long-term future of Boeing in the region.

Stefan Bishay, 28, joined the company four years ago and went on strike almost immediately. He said this may not be the end of labor trouble at Boeing, but it's a start.

"Accepting this will go a long way to improving relations between the company and union throughout my career," Bishay said.

Holding on to future work was also what prompted Bob Casale, 57, a 30-year employee who works at the Seattle wind tunnel, to vote yes.

"We accepted less on health care and wages," he said. "The payback is the job security for the future of Washington state employees."

David Benson, 60, a building-maintenance technician in Seattle, said he voted yes because of the depressed economy.

"I have neighbors, I look at what they deal with. We're fortunate," he said. "A lot of people in this nation are not getting a raise or are suffering cuts."

The deal will affect the company and the 29,000 local members of the IAM, along with the entire 81,000-strong Boeing workforce in Washington, the about 30,000 additional people working at aerospace suppliers in the state, as well as the wider community that benefits from all those high-paying jobs.

The average annual base wage of Boeing's Machinists is $59,000, with typically about 20 percent on top of that for overtime pay.

Tayloe Washburn, who led the state's effort to land the MAX here, cites the average annual aerospace wage in the state as $91,000, compared to the overall state annual average wage of $49,000.

Wilson Ferguson, 55, with the white beard of a 25-year veteran, was dressed as Santa on Wednesday to entertain kids at a local lodge meeting.

"It's a fair deal in this economy," said Ferguson. "I'm glad this region has got some security."

He said he voted to accept, helping deliver a $5,000 signing bonus to IAM members in time for Christmas.

Dominic Gates: 206-464-2963 or

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