Machinists say yes, secure 777X for Everett
Machinists union members take a pivotal vote on Boeing’s contract offer, shaping the future of the aerospace industry here.
Seattle Times aerospace reporter
Contract’s key details
The Boeing proposal that Machinists voted on Friday has these major elements:
• Extends current contract by eight years, through 2024
• Ends pension-plan accruals in 2016, substitutes a defined-contribution savings retirement plan. Instead of pension, Boeing contributes to a current employee’s retirement account 10 percent of gross pay the first and second years, 6 percent the next year, and 4 percent a year after that. New employees get 4 percent a year.
• Retains the current 401(k) plan (distinct from savings retirement plan), and increases company match to 6 percent of base pay, from 4 percent.
• Maintains the wage progression known as “zoom,” which moves new hires to top of their grade’s pay scale after six years.
• 4 percent general wage increase over eight years, plus cost of living.
• Provides $10,000 signing bonus now, another $5,000 bonus in 2020,
Source: Boeing, Machinists
A contentious two months
Nov. 5: Boeing says it will build 777X jet and its large advanced wings in Washington if Legislature enacts an incentive package and Machinists approve a contract extension from 2016 to 2024, with significant concessions.
Nov. 9: Special session of Legislature approves $8.7 billion in tax breaks if Boeing builds 777X in state.
Nov. 13: Machinists vote by 2 to 1 to reject Boeing’s contract.
Nov. 14: Boeing begins search for other sites for 777X wing fabrication and airplane assembly, asking bidders to provide site and facilities at “no cost, or very low cost.”
Dec. 10: Company and union resume talks. States submit their 777X offers to Boeing.
Dec. 12: Boeing makes ‘best and final’ offer; District 751 leadership rejects it, says there’s no need to vote because it’s not much improved.
Dec. 21: Union’s national leaders overrule District 751 and schedule vote for Jan. 3. Later, they allow absentee ballots so members who are still on holiday break can vote.
The Seattle Times
Members of the Machinists union Friday accepted Boeing’s contract proposal by a slim 51 percent, sealing a cliffhanger ending to a tense chapter in the history of their union, their industry and their region.
The deal passed despite a strident Vote No campaign led by the union’s local leadership. When the result was announced inside the Seattle union hall filled with militant Machinists who opposed the contract, some men and women wiped away tears and a few cried openly.
The International Association of Machinists (IAM)did not release an official vote count, but Wilson Ferguson, president of the Local A unit of the district, said about 23,900 total votes were counted and the margin was around 600 votes. Voter turnout was lower than the earlier vote in November because many members were still on their Christmas break.
The outcome means Boeing will build the 777X jetliner in Everett and its wings will be fabricated nearby by Boeing machinists.
Approval by union members also means the company abruptly terminates its wooing of other states to compete for the work.
Boeing is assured of labor peace for the next decade, and its most experienced workers will build the widebody jet it needs to fight off a challenge from Airbus.
The region’s economy is assured of high employment at Boeing for a decade to come, and likely more.
Boeing Commercial Airplanes President and CEO Ray Conner issued a statement welcoming the result.
“Thanks to this vote by our employees, the future of Boeing in the Puget Sound region has never looked brighter,” said Conner. “We’re proud to say that together, we’ll build the world’s next great airplane — the 777X and its new wing — right here. This will put our workforce on the cutting edge of composite technology, while sustaining thousands of local jobs for years to come.”
The 32,000 members of Boeing’s blue-collar union, however, will give up some hard-won benefits, including the traditional pension.
With the vote, they qualify at once for a $10,000 bonus.
For both the Boeing employees and those at firms fueled by Boeing spending — from aerospace suppliers to restaurants and car dealerships — the bigger bonus is job security. If the vote had gone the other way, the prospect was a precipitous decline in the plane-building workforce.
Because of the advanced manufacturing technology involved in fabricating the new plane’s composite wing, Boeing employees now can look with some optimism to a future in aerospace work well beyond 2024.
Boeing’s wing mechanics will be retrained in the advanced processes used to manufacture large structures made from carbon-fiber reinforced plastic, setting up the next generation to build future jets made from this material.
Tom Wroblewski, IAM District 751 president, announced the result but did not speak to the press.
Emerging from the hall, Mark Johnson, aerospace coordinator for the national IAM headquarters, said, “It was a tough vote, a hard situation, splitting the membership.”
IAM International President Tom Buffenbarger, who forced the vote, issued a statement welcoming the result.
“The impact of this agreement extends far beyond IAM members who voted today,” Buffenbarger said. “For decades to come, the entire region will benefit from the economic activity and technological innovations that will accompany the production of the 777X and 737 MAX.”
Yet for the local Machinists who voted, the decision was not reached easily.
Inside the union hall Friday night, the announcement of the contract’s acceptance was greeted with shock, tears and one cry of “bullshit.”
IAM spokesman Bryan Corliss said the deal was difficult to accept because the last two strikes, in 2005 and 2008, “were driven in large part by Boeing’s attempt to take away the pension from new hires.”
“To lose it this way is hard to accept,” said Corliss.
One union member in the hall at the announcement called for a union withdrawal slip. Most filed silently out of the room, consoling each other. “We’re going to be OK,” one said to another.
Wroblewski and his team this past week posted urgent messages couched in militant language on the local IAM website denouncing the “massive take-aways” in Boeing’s offer and calling for a rejection vote.
Their anti-contract stance was much more clear-cut than the opposition they’d offered to Boeing’s first contract extension proposal, which Machinists voted down by 2 to 1.
But his members ignored the very loud Vote No campaign, instead appearing to recognize the imminent risk of losing future jobs if they took that path.
Corliss said nobody was happy with the contract offer.
“But when the gun was held to their heads, our members felt compelled to vote yes,” he said.
Reassurances from Boeing’s leadership that the pensions already accrued are protected and safe may also have won over some Machinists.
Washington state political leaders, including Gov. Jay Inslee, expressed delight and relief at the result.
“Tonight, Washington state secured its future as the aerospace capital of the world,” said Inslee. “We will make sure the company keeps its commitment and that these jobs remain in Washington state for the life of the airplane.
“We have a history of innovation in our state that has gotten us to this point today and will chart our future for decades to come,” he added.
By November, Boeing plans to begin construction of a 1.1 million-square-foot facility for building the 777X wings.
Boeing projects that just this facility, at a still-unidentified site in Washington state, will require up to $4 billion in new investment and will provide nearly 3,000 jobs at peak production in 2024.
News of the Machinists’ yes vote will disappoint officials in 21 other states, including such top contenders as Texas, Utah and South Carolina, who scurried to put together incentives for Boeing as they submitted formal bids for the work.
The 777X is a new version of Boeing’s highly successful 777 twin-engine widebody jet, which is built today in Everett.
Launched at the Dubai Air Show in November with record-breaking orders and commitments worth more than $52 billion after estimated discounts, the new model is scheduled to enter service around 2020.
It will come in 400-seat and 350-seat versions and will feature new fuel-efficient engines, the largest on any airliner.
And while today’s 777 is metal except for its carbon-fiber-reinforced plastic tail, the 777X will add an advanced wing — at 114 feet, the largest ever built by Boeing — made from that same composite material.
Successfully building and selling the plane is crucial for Boeing to maintain its current dominance in the large widebody market against the rival Airbus A350, which flew for the first time in June at the Paris Air Show.
Boeing cannot afford to repeat on 777X its painful and expensive experience with the failed manufacturing plan on the 787 Dreamliner program. It needs to deliver this next airplane on time.
That business imperative convinced some Machinists that Boeing management could not dump their expertise and the existing infrastructure in Everett.
Voting at the Renton union hall Friday, Steve Averill, 57, called Boeing’s threat to pull out of Washington state “B.S.” He pointed to production problems at the 787 Dreamliner plant in South Carolina, where he said “they’re not fifth-generation airplane builders.”
“We build the best jets in the world,” said Averill, a 26-year Boeing veteran who works as a 737 repair mechanic. “If Boeing wants the best, they’ll stick with us.”
Driving away on his Harley, Averill shouted “Hell no!” to other sympathetic Machinists.
But other Machinists responded to Boeing’s warnings by voting Friday to accept the offer.
Avery Madden, 30, voting at the Renton union hall, said he chose to accept Boeing’s proposal in the first vote in November and then again Friday, both times hoping to secure Boeing jobs in the region.
“I don’t ever want to gamble. I’ve got a family to take care of,” said Madden, a 737 mechanic with two years at Boeing and the father of a baby girl.
Though the latest offer froze the traditional company pension, he said, Boeing still offers good pay and benefits, including college-tuition assistance.
“I just think at my age, there’s more ways to invest in my future. I’m not stuck on pensions just to say ‘no’ to Boeing and watch them leave,” Madden said. “There aren’t a lot of jobs out there I can find that match Boeing.”
In return for its deal to build the 777X jet and fabricate its wings in Washington, Boeing has won dramatic cuts in its long-term costs. Making demands two years ahead of the current contract’s expiration date — thereby leaving the union no option to strike if the negotiations failed — Boeing secured a deal that includes radical changes to the benefits structure that the IAM has defended for years.
Nancy Stapleton, 60, voted “yes” Friday at the Machinists union hall in Renton, after voting “no” to Boeing’s initial offer in November.
Stapleton said she was encouraged that the company dropped a proposed change in the earlier offer that would have made new hires wait 16 years to reach the top of the pay scale instead of the 6 years it takes today.
And Stapleton said she took seriously Boeing’s threat to move 777X work out of Washington state.
“I call this protecting our younger generation,” said Stapleton, who was accompanied by her 11-year-old grandson Noah. “There’s a lot of jobs at stake.”
Staff reporters Amy Martinez, Coral Garnick, Sanjay Bhatt, Angel Gonzalez, Kyung M. Song and Christine Clarridge contributed to this story.
Dominic Gates: 206-464-2963 or email@example.com