Union machinists are voting on the latest contract offer for production of the Boeing 777X commercial aircraft. If the contract is rejected, other states are eager to attract those thousands of jobs.
Thousands of jobs and billions of dollars are on the line in Seattle Friday, where Boeing machinists are voting on a contract that could determine the future of their union as well as the direction of a major US manufacturing company that for nearly a century has produced aircraft in the Puget Sound area for a worldwide market.
Two major fights are going on: between Boeing and Seattle-area members of the International Association of Machinists and Aerospace Workers (IAM), who turned down a contract in November; and within the union itself, pitting the international labor organization against IAM local 751.
Looming over it all is the prospect that thousands of Boeing jobs could leave the Seattle area if machinists turn down the company’s latest offer.
At least a dozen other states – including Alabama, California, Missouri, South Carolina, Texas, and Utah – have begun responding to a company request for proposals, including tax subsidies designed to lure Boeing to regions eager to build the new 777X with its composite wing.
“Some may believe this is a ‘fake’ play by the Company,” IAM international president R. Thomas Buffenbarger wrote to union members last week. “Your union, based upon information that indicates otherwise, must take the threat seriously.”
“Given the legalities of the RFP [request for proposal] process and the fact that several states have tendered serious offers and incentive packages to the Company, the timeline for the Puget Sound area is expiring,” Mr. Buffenbarger wrote.
Like the design and production of large commercial aircraft, the current offer is long-term, extending the current contract to 2024.
Much of the debate over the new contract centers on retirement provisions. Like many US firms and organizations, Boeing is moving away from vested pensions toward employee/employer investment programs.
In a Dec. 27 letter e-mailed to employees, Boeing vice president Alan R. May acknowledged that there would be “changes to your compensation and benefits.” But he added that “you will continue to receive market-leading wages and benefits – the best in our industry.”
The company “will continue to maintain market-leading retirement benefits,” Mr. May wrote, including accrued pension benefits, which Boeing will continue to fund, and an increase in the company’s contribution to employees’ retirement investment accounts to 75 percent of the first 8 percent contributed by employees from their pay.
May noted that “our markets have become much more competitive and the planes we are selling now are at significant relative price discounts to those in the past.”
In his letter to union members, IAM international president Buffenbarger noted that “the total value of the new improvements to the contract offer adds more than $1 billion to the previous offer.”
“I believe this represents a ‘significant’ improvement worthy of the membership’s consideration,” he wrote. “The total value of the Company’s current proposal is nearly $5 billion as of today’s calculations.”
Included in Boeing’s latest contract proposal are an enhanced signing bonus and a provision making it easier for employees to move up the pay scale. With overtime, some experienced Boeing machinists are able to earn more than $100,000 a year.
While the contract offer would slow the growth of machinists' wages starting in 2016, workers would still get regular cost-of-living adjustments, plus an extra 1 percent pay increase every other year. By 2020, experienced workers in the most common class of machinists, which includes mechanics and electricians, would earn about $82,000, up from about $73,000 today.
But at rallies this week, many union members urged fellow machinists to reject the latest offer.
“... the terms of this agreement are destructive to what we have gained over the last 78 years,” warns one worker on a Facebook page called “Give Us a Voice.” “This would place our members in an unacceptable position over 11 long years without the ability to negotiate any reasonable improvements during this time period.”
Boeing said Thursday an approved contract this week would ensure that the 777X will be built in the Puget Sound area, including the fuselage, wing fabrication, and final assembly. The 777X is a new iteration of Boeing's strong-selling 777, and the Chicago-based company recently received orders for 225 new 777X planes from three airlines at the Dubai Airshow in the United Arab Emirates.
According to The Seattle Times, Boeing employs more than 82,000 people in the Puget Sound area, and suppliers bump up the number of aerospace jobs in the state to about 132,000.
Union members are voting on Boeing’s latest proposal into Friday evening. Results of the vote are expected around midnight.
• This report includes material from the Associated Press.