When a region’s economy changes dramatically for better or worse, there seldom is a pivotal event that historians can single out as the turning point for the area’s business fortunes. There are too many major and minor events over years or decades that erode or enhance a region’s standing as a business center.
Wednesday’s Machinists union vote on Boeing’s proposed eight-year labor contract might be the exception to that rule.
At stake, says Boeing and some governmental and union leaders, is the future of Washington and the Northwest as the nation’s leading aerospace manufacturing center.
But also riding on that vote is the ability of regional aerospace workers to win good wages, benefits and working conditions from the Northwest’s leading manufacturer.
Boeing’s proposal, announced just a week ago, comes with a significant prize if accepted: construction of Boeing’s newest wide-bodied plane, the 777X, at Boeing’s Everett plant and the fabrication of that plane’s new composite wing at a Washington facility.
Construction of that plane and wing in Western Washington will mean jobs for 10,000 Boeing workers and perhaps 10,000 more in allied industries.
Union members will vote throughout the day Wednesday at union halls in Western Washington and in the Portland area. Vote totals are expected to be announced Wednesday evening.
Speaking in Tokyo, a senior Boeing executive said the company hoped Machinists would back the contract to secure production of the 777X in Washington but would look at alternatives, including Japan, if the deal were rejected.
“If not ratified, we will consider all other alternatives,” chief technology officer John Tracy told a news briefing with suppliers. He said the alternatives include building 777X wings in Japan.
A Tuesday report from Japan says Mitsubishi Heavy Industries, which builds the Boeing 787 composite wing in a Japanese plant, is preparing a bid to build the 777X wing there also. Mitsubishi reportedly is proposing to build a fleet of five ocean freighters to ship the finished wings to the 777X final assembly site.
Meanwhile, South Carolina, which is the site of Boeing’s second 787 assembly plant, is developing contingency plans to seek the 777X work on a site adjacent to the 787 plant that Boeing recently acquired.
California is making noise about proposing to build the airliner in the plant the company now uses to construct the C-17 military transport. C-17 production is headed toward shutdown.
Texas could propose a site at a former Air Force Base in San Antonio, where Boeing now performs major maintenance work on Air Force planes. And half a dozen other states — including Alabama, where Boeing rival Airbus is building its first U.S. assembly plant — stand ready to bid for Boeing’s work.
But even without workers’ approval of what is a dramatically leaner labor contract, Washington still has much to offer Boeing that other states can’t match, say union members calling for a contract rejection.
Washington has a skilled and experienced labor force that now assembles the existing 777 in an existing plant. Washington is a hub of aerospace suppliers that support the 777’s assembly. They supply many of the parts and services needed to build the plane.
If Boeing moved the 777X to another state, in most cases it would have to build a new plant, train and hire a new workforce and recruit a new network of local suppliers. Doing all of that would add complexity and complication to what already is the complicated and complex job of creating a new model of the 777.
Some union members contend Boeing’s bad experience with its most recent new aircraft, the 787 Dreamliner, should have taught the company not to introduce too much change into the production system when trying to design and build a cutting-edge airplane.
Boeing’s decision to outsource much of the 787 design and construction to other aerospace companies played a large role in the plane’s tardy rollout, three years behind schedule.
Some union sources claim Boeing’s experience with its new South Carolina 787 plant hasn’t been encouraging. They claim that plant still is producing Dreamliners at a snail’s pace with twice as many workers as the company’s other 787 assembly line in Everett. Boeing says it is happy with its South Carolina experience.
Union leadership on some levels has urged members to reject the proposal, while top leadership has remained officially neutral on the question of ratification.
Certainly, the deal offered by Boeing is significantly leaner than past Machinists’ contracts.
So dramatic are the changes that union members by the hundreds have rallied outside Boeing’s Everett plant denouncing the proposal. And even Tom Wroblewski, the union’s district local president, reportedly tore up a copy of the proposal at an emotional union meeting. Wroblewski since then has become officially noncommittal on the proposal.
While it offers a big ratification bonus, a $10,000 payment to every one of Boeing’s 31,000 Washington and Oregon Machinists, it offers relatively paltry general wage increases over the eight-year contract, a total of four percent over the term.
The proposal accomplishes for Boeing a long-held objective. It effectively puts an end to the defined benefit pension plan that the company has had for decades. The contract freezes defined benefit pensions at current levels of accrual, but raises the amount of retirement to $95 per month per year of service. Workers already in that plan would receive benefits at retirement, but the level wouldn’t grow.
To replace that pension plan, Boeing proposes a richer 401(k) savings plan match and establishment of a new pension plan to which the company would contribute a fixed amount (10 percent of salary in the first two years and then declining to 4 percent).
Boeing would offer union workers a yearly bonus plan that could enrich their salaries by up to 6 percent if the company reaches its business goals.
The deal also alters the company medical insurance plan, increasing worker contributions and costs. But the company and the union say even with the changes, the Boeing medical coverage will be better than many corporate plans around the country.
Those who don’t like the changes have urged members to vote no. They believe Boeing will come back to the bargaining table with a better offer either within short order or in two years when the existing contract runs out. The company is bluffing about building the new plane elsewhere, they say.
Boeing Commercials Airplanes President Ray Conner says the plan is not just posturing. “It’s not a bluff,” Conner said recently. “My sincere hope is we don’t have to even think about that. Really, we would prefer not to do that.”
And the Legislature, called into session hurriedly last week, was taking no chances, however. It quickly passed an $8.7 billion tax relief and worker training bill that Boeing had sought as part of the price Washington had to pay to ensure its vaunted aircraft industry doesn’t roll up the moving vans and head to friendlier locales.
Good Jobs First, an organization that keeps track of government subsidies to business, says Washington’s new tax relief bill is the largest in U.S. history.John Gillie: 253-597-8663 john.gillie@ thenewstribune.com Reuters contributed to this report.