Seattle – In what could be a harbinger of the future direction of union contract negotiations at large union companies across America, union Machinists at Boeing accepted, by a one percent margin (an estimated 600 votes of the 10,000 eligible to vote), a massive “give back” union contract in order to keep thousands of jobs intact, maybe!
Using the threat of moving production work for the next generation passenger jet – the 777X – to another state – and getting 22 states publicly and actively involved in making a bid for the work as a blatant show of force to Machinsts Lodge 751 members who had already rejected the offer – Boeing was able to force major concessions:
• An eight-year contract extension from 2016 to 2024.
• Ending contributions to the traditional defined benefit pension plan and freezing it for current employees and blocking any new employees from participating. Moving forward all employees will be moved into a 401(k) plan.
• No clear guarantee of work staying put. The new contract language clearly states the company reserves the right to subcontract or outsource “certain 777X work packages in whole or part.”
• Boeing leaders have told the IAM that they do not intend to use any of the current wing line mechanics to do 777X wing work.
• Health care premiums for employees will rise an anticipate minimum of 10 percent.
• Wage boosts will be limited to an average of one half percent over the eight year span of the contract extension.
All this in spite of the fact that Boeing is seeing record profits and backlogs for its planes, said IAM Lodge 751 President Tom Wroblewski.
“The fact that Boeing is doing this is going to send a message to other companies — we can now put that on the table,” Leon Grunberg, a University of Puget Sound sociology professor told a reporter for the Los Angeles Times.
“In the larger context, there were some important gains that the Machinists won long term, specifically at least 8,000 Machinist Union jobs at Boeing and possibly as many as 20,000 jobs in the region,” said Harley Shaiken, a prominent union expert and professor at UC Berkeley. “In this global context, to have the most advanced manufacturing sited in a unionized setting is an important victory — that came at a high cost,” he told the Times.
The concessions demanded of the IAM here are not the end, but only the beginning, Scott Hamilton, an aviation industry consultant and managing director of Leeham Co. in Issaquah, Wash., told the Times.
“Boeing probably will continue to seek concessions from the union when the company proceeds with a future new airplane design,” Hamilton said on his website after the union vote. “We’re going to see another round of efforts to browbeat the union and the state into more concessions or give-backs in exchange for production to be located here.”
Boeing told the Times that the contract concessions were essential to compete financially with longtime European rival Airbus, which plans to deliver the first of its more fuel-efficient twin-aisle jetliners this year. The two companies are neck and neck in the large jet market, with each looking for even the smallest of financial gains over the other.
MAJOR SAVINGS FOR BOEING
The contract savings for Boeing are estimated to be more than $5 billion over the contract’s life. This is on top of the $8.7 billion incentive package offered by the State of Washington.
The union’s leadership and negotiating committee had argued against the proposal.
“We recommended our members reject the offer because we felt the cost was too high, in terms of our lost pensions and thousands of dollars in additional health care costs we’ll have to pay each year,” said Wroblewski.
“Our members have spoken and this is the course we’ll take,” he added.
The first attempt several months ago to pass this give-back proposal was rejected by a 2 to 1 margin. The International Union ordered a second vote.
The new pact covers some 8,000 IAM members working a Boeing facilities the Puget Sound area, around Portland, Ore., and in Wichita, Kansas. They currently build the fuselage and wings for Boeing’s commercial jets.
IN WORKERS’ BEST INTEREST
“IAM members have built Boeing aircraft in Puget Sound for more than 60 years. This agreement assures they’ll continue building them for decades to come,” said IAM General President Thomas Buffenbarger.
“After weeks of robust debate, IAM members at Boeing made decisions they felt were in the best interest of their careers. Despite individual differences, I believe this vote preserves thousands of good-paying IAM jobs, while assuring the success of the 777X program,” Buffenbarger added.
The vote kills any opportunity to get the plant to move the 777X production to St. Louis, an effort vigorously supported by local labor and business leaders and a $3.5 billion offer of financial incentives from the State of Missouri and St. Louis County.
St. Louis area labor leaders had committed to a 24-hour, three-shift work schedule on any Boeing related projects, promising to shave more than two years off the planned five-year construction timetable without requiring overtime pay, but in the end it wasn’t enough.
“I think we put our best face forward,” said Jeff Aboussie, executive secretary-treasurer of the St. Louis Building and Construction Trades Council. “Unfortunately, Boeing Machinists voted to accept that agreement.
“I am pleased to see it didn’t go to a right-to-work state,” Aboussie said.
(Information for this article from PAI, the Los Angeles Times and the Labor Tribune.)