Crucial Machinist contract vote likely to be close
As the key vote loomed, politicians, union workers and industry watchers all agreed rejection of Boeing’s tough terms would take both the company and the Machinists into risky new territory.
Seattle Times aerospace reporter
The Legislature Saturday overwhelmingly passed a package of incentives meant to assure Boeing builds the 777X jet in Washington state, but the Machinists who’ll vote Wednesday on their piece of the company’s take-it-or-leave-it proposal face a more personal decision.
One 32-year-old Machinist at Boeing’s Auburn plant said all his co-workers are edgy and anxious, endlessly discussing what to do. He’s voting yes, to approve Boeing’s offer.
“It’s like I’m smiling while I’m being kicked in the balls,” he said. “But it’s better than being decapitated.”
The only union official authorized to talk about the proposed 8-year contract extension on Saturday predicted the vote will be close, and offered a strangely positive counterpoint to the fervent denunciation of the deal two days earlier by the Machinists’ local leader.
As the crucial vote loomed, politicians, union workers and industry watchers all agreed that rejection of the company’s tough terms would take both Boeing and the Machinists into risky new territory.
Boeing insists it would quickly pivot and hunt for alternative locations for its crucial new airplane model, even as it prepares to launch the jet program at the Dubai Air Show just a week away.
Some Machinists assume Boeing is bluffing and would rework its contract proposal. If not, that would be a devastating blow for the union and for the state, spelling an end early in the next decade for 777 production that employs some 20,000 people at the Everett widebody plant.
The Auburn Machinist who plans to vote yes said Boeing’s proposal for an 8-year contract with significant cuts in pensions, benefits and future pay increases is “eviscerating” both the current benefits package and the union.
“But you have to do a cost-benefit analysis,” he said. “It’s unrealistic to believe the benefits package ... is sustainable. We’d rather have the jobs.”
The average gross pay for Boeing Machinists last year was about $85,000.
The contract extension offered by the company provides raises of only 1 percent every other year, on top of a cost-of-living adjustment to keep pace with inflation.
The major issue for many Machinists is that Boeing would end contributions to the traditional pension, replacing that with a defined-contribution retirement savings plan.
Another thorny issue is that the current wage structure — in which employees zoom to the top of the pay scale at the end of their sixth year — would be replaced for new hires by a plodding progression that means they wouldn’t reach the maximum pay for 16 years or longer.
In addition, health-care premiums and copays would rise.
Yet on Saturday, the International Association of Machinists (IAM) union offered a positive perspective on the 777X deal that focused solely on the job security it would bring.
This contrasted sharply with Thursday night’s events, when the IAM’s local district president, Tom Wroblewski, tore up a copy of Boeing’s offer at a union meeting and called it “a piece of crap.”
Reflecting a deep fissure within the union, the IAM national headquarters is now tightly controlling the message.
Wroblewski was not available for interview, and most of the local district staff — even the union’s two media officers — have been barred from talking to the media.
Instead, Joe Crockett, a union-business representative in Auburn, spoke for the union on Saturday.
“These are good jobs. They pay well and we will still have good benefits,” said Crockett. “We will still have, for us and our families, a future. That’s what it’s all about.”
Unlike many union members, Crockett doesn’t believe Boeing is bluffing in its threat to take 777X work elsewhere if the vote fails.
Crockett’s assessment, from his discussions with members, is that the vote will be “very close.”
Gov. Jay Inslee, in an interview Saturday, echoed the message that what’s at stake with the 777X is securing local blue-collar, middle-class jobs for the future.
While the state is also known for software and biotech firms, he said, aerospace provides the Washington economy with high-end jobs for “people who work with their hands and their minds.”
The carbon-fiber-reinforced plastic composite wings of the 787 Dreamliner are built in Japan, but Boeing promises — if its conditions are met — to locate a facility here to fabricate the 777X’s composite wings.
Inslee said that will secure “probably the single most important advanced technology in manufacturing today” and greatly enhance the state’s chances of making future Boeing airplanes as well as the 777X. “What went out to Japan is now coming in to Washington,” he said.
He said he regards the state’s scramble to win that prize as “an investment, rather than being dictated to” by Boeing.
“We are making a rational decision,” he said. “It’s a good deal for the state.”
Inslee said he thinks there is “at minimum, a substantial risk” of losing the work unless the state provides the incentives and tax breaks. “I don’t believe ... that we should roll the dice,” he said.
Boeing spokesman Marc Birtel on Saturday echoed Inslee’s take on the importance of the 777X wing.
“We’re offering our workforce in Puget Sound the opportunity to build the most revolutionary wing our industry has ever seen — and assemble what will no doubt be one of the most popular airplanes in the world,” Birtel said. “It would put employees here on the cutting edge of composite technology.”
Together, the proposed union deal and the legislative incentives “make for a strong business case for Puget Sound,” he said. “But the business case goes away without all of those elements,” he said.
“The company has to take the right steps today to ensure our competitiveness for the future,” he added. “The vote on the contract extension is absolutely real. ... We’ll begin taking the next steps if the extension is not ratified. “
He said Boeing has evaluated “a number of viable options,” including alternative company sites as well as some new locations.
Aviation analyst Richard Aboulafia, of the Teal Group, shares the widespread opinion of industry experts that doing the 777X work anywhere but Washington state, where the current 777 is built, would be more expensive for Boeing and would risk delays and quality problems such as were seen on the 787 program.
“In terms of risk and cost, it wouldn’t be great for the program,” he said.
Given that reality, he said it’s very likely that even if the Machinists narrowly reject Boeing’s offer Wednesday, it wouldn’t be the end of the state’s chances.
He said politicians or other intermediaries might then step in to mediate to try to move the contract terms a little toward the union, enough to pass it on a later vote.
But he said that inevitably Boeing would — as threatened — immediately accelerate plans to find an alternative site.
“Just because Boeing has less leverage than it claims doesn’t mean they don’t have a fallback plan,” Aboulafia said.
While he believes strongly that the Puget Sound area has “incredible advantages” as a site for the 777X, he said “a perpetually dysfunctional labor-relations problem” might scare management away.
He said the scene Thursday night at the Seattle union hall — when Wroblewski called the Boeing offer “crap” and hundreds of angry Machinists were virtually unanimous in loudly opposing it — “looked as toxic as the worst years” of relations between Boeing and the IAM.
After leaving Thursday’s meeting, Machinist Tom Wigen, 49, said he’s voting no because Boeing’s offer would cut the value of his pension by 40 percent.
But he said Boeing has made a “brilliant” strategic play for votes in tempting younger workers with a $10,000 signing bonus and some of the older guys with an early retirement buyout.
“Divide and conquer,” Wigen said.
Boeing’s Birtel insisted that despite the benefit cuts and wage-structure change, the deal still offers Machinists “pay and benefits superior to what other companies provide.” The cuts, he said, are needed to ensure competitiveness against Airbus.
A 26-year-old Everett Machinist who works on the 777, one of the younger crowd who isn’t active in the union, thinks the vote will be close.
“This is a very divided issue,” he said. “Though the ‘Hell No!’ contingent may be louder and more involved in the union, there are plenty of us who will be more than willing to vote yes to secure jobs in Washington state.”
Asking for anonymity because of “the intimidating and bullying tactics” of those opposed, he said he thinks a majority of workers on his second shift in Everett are leaning toward yes, with first shift leaning toward no.
“My particular crew is probably 80 percent yes but we have a lot of new people, so that skews it,” he added.
He said that while he recognizes the value of the Boeing traditional pension, he assumed when he joined the company two years ago that it would be gone by the time he retires.
“Without 777X, our contract isn’t worth the paper it’s printed on,” he said. “There are plenty of us that realize that, and won’t let the old dinosaurs ruin it for us because they don’t want to give up on an outdated pension plan.”
One veteran Machinist who is active in the union, one of the “dinosaurs,” said he’ll vote yes, also.
After the drama of Thursday night’s union meeting, he said workers will talk with their spouses and that “reality is going to settle in over the weekend.”
He said he expects a close vote to approve the deal after Boeing’s aggressive signals that otherwise 777X will go elsewhere.
“If the Mariners played hardball like this, we’d be in the World Series,” he said.
Dominic Gates: 206-464-2963 or email@example.com