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No-strike deal was on table in Boeing negotiations
Site: Machinists union offered contract extension if Boeing chose state over South Carolina for 787 work


Published: 10/31/09  12:05 am   |   Updated: 10/31/09  12:40 pm
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The Boeing Co. “blew a wonderful opportunity” for a no-strike guarantee of more than 10 years when it chose South Carolina over its Washington manufacturing hub for a new Dreamliner assembly line, the lead negotiator for the Machinists union said.

The union was willing to extend its current four-year contract by another eight years, ensuring no strikes through at least 2020, to secure the 787 work, Rich Michalski said. Instead, Boeing shut down talks two days before its Oct. 26 board meeting and announced Oct. 28 that it would open a plant in the southeastern U.S. state, the first time it has built a commercial-aircraft assembly line outside the Seattle area.

“They won’t ever get us to commit like that again,” Michalski said in an interview Thursday night. “That’s over.”

Boeing and the International Association of Machinists and Aerospace Workers sent contradictory e-mails to employees Thursday, and interviews with negotiators for the two yielded conflicting accounts about the talks. The relationship has faltered in the past 20 years, with four strikes delaying hundreds of deliveries and costing the company billions.

The current contract with the machinists, agreed to after a two-month strike last year that cut Boeing profit by about $10.3 million a day, expires in September 2012. That’s about six months after the first delivery is due from the non-union plant in South Carolina.

“The risk for Boeing is, moving to South Carolina does not solve its labor issues with the IAM; if anything it adds a troubling new layer to them,” said Harley Shaiken, a professor at the University of California at Berkeley who specializes in labor issues.

Boeing bought half of a joint-venture 787 facility in North Charleston, South Carolina, last year and then purchased the adjacent parts plant in July, with studies for a final-assembly line beginning in earnest “earlier this year,” said Doug Kight, a human-resources vice president for the planemaker. The company declined to give a more specific timeline.

Workers at the parts plant voted last month to drop their membership in the Machinists union. Unlike Washington, South Carolina is a right-to-work state, meaning employees there can’t be forced to join a union.

Boeing plans to break ground by the end of November on the new complex, which will include an assembly line, parts production line and testing and delivery center that duplicate operations in Everett. That’s raised concern in Washington that it might siphon away more jobs as the company considers other new aircraft models. By late 2013, Boeing plans to be building three Dreamliners a month in the South and seven in Everett.

To keep the 787 work in Washington, the union presented a plan for the no-strike agreement along with proposals including 3 percent a year in wage hikes, Michalski said. Boeing never responded, he said. Kight said the situation “wasn’t a classic negotiation” and the union was asked to meet two key goals for Boeing – production stability and cost competitiveness – which it didn’t do.

“The price was too high” for the no-strike deal, Kight, who negotiated for Boeing, said last night. “We’ve got really strong competition in each segment, and it’s not just from Airbus, it’s from companies in five nations being subsidized by their governments.”

China, Canada, Japan, Russia and Brazil are in various stages of plans to enter the commercial-jet market. Boeing, which began in Seattle in 1916, and larger commercial rival Airbus SAS, have held a duopoly on jetliners until now.

Boeing gave the union until Oct. 21 to provide a proposal for keeping the work in Everett that the company’s board could discuss Oct. 26, Kight said. Michalski said he had never been given a deadline and that, after an offer was presented Oct. 21, his repeated calls to Boeing starting Oct. 24 to let the company know he was “willing to work with them on all economics and everything else” weren’t returned.

“This is extremely extraordinary,” said Michalski, who’s based in Washington, D.C., has been with the union for about 35 years and was brought in for the last six days of last year’s strike to broker an agreement. He said he’s worked closely with Boeing to lobby for defense programs such as the F-22 and the aerial refueling tanker as well as airline contracts.

Boeing’s plans have “huge implications” because aerospace is a leading industry and is the biggest U.S. exporter, professor Shaiken said. “Their voice in Washington (D.C.) was strengthened considerably when the IAM and Boeing were on the same page.”

The deal the union was offering “would have been a precedent-setting item in this country,” Michalski said.

Kight said the union was told “very early on” that progress would be impeded by demands that Boeing not oppose organizing efforts at non-unionized plants and that there be guarantees for work on future airplane models in Puget Sound.

Boeing began shifting away from Seattle after the company’s 1997 purchase of St. Louis-based McDonnell Douglas Corp., which had a large military business. In 2001, Boeing moved its corporate headquarters to Chicago to be closer to financial centers and its defense operations. The commercial headquarters are still in Seattle.

“This was a historic decision,” Kight said. “We made a business decision, and the ramifications of it were understood.”

There was an expected “emotional reaction” to the news in the Seattle area, Kight said. “But it will calm down and we’ll get after the task of making this a success.” He added that he has already received e-mails from some employees asking to transfer to North Charleston.

“This is a big deal,” Michalski said. The union will honor its contract, he said, and then, “we’ll see them in three years.”

 

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