By Chuck Taylor Herald Writer
Members of the International Association of Machinists and Aerospace Workers (IAM) are voting today on a proposed contract extension in which the Boeing Co. promises to do final assembly of the new 777X in Everett and build the plane’s wings in Washington — if union members are willing to accept major changes in previously negotiated benefits.
If you haven’t been paying close attention, here are some questions and answers to prepare you for the election’s results.
Q: What is at stake in today’s voting?
A: The outcome could determine where Boeing builds the next iteration of the popular and profitable 777, dubbed the 777X. The new version of the widebody plane will have carbon-fiber-composite wings and other improvements to make it more fuel-efficient.
The present 777 was designed and has been built exclusively in Everett for almost 20 years. Boeing says if it doesn’t get what it wants, it will explore siting 777X work outside Washington.
That means 777 work in Everett could eventually dry up. Today, about 19,700 Boeing employees are directly involved in 777 production. A state study estimates that another 9,400 Washingtonians are indirectly employed in 777 work at suppliers and other businesses.
Q: Could there be a strike?
A: Not now. The current contract doesn’t expire until 2016. A no vote will simply mean that the present contract won’t be extended — at least not under the terms Boeing proposes.
Q: Who are the Machinists involved?
A: The IAM is a huge union. This contract extension would affect about 32,000 of them employed by Boeing in Washington and Oregon — members of Seattle-based District 751. These workers include mechanics certified by the Federal Aviation Administration and other workers who do fabrication and assembly in Boeing’s plants in Everett, Renton, Auburn, Frederickson and other locations. They build 737s, 747s, 767s and KC-46A tankers, 777s and 787s. Workers in South Carolina who also build the 787 are non-union and are unaffected by the vote here.
Q: What is different in this proposal from the existing contract?
A: The major changes would involve retirement plans and health-care insurance.
• Pension accrual would end in 2016, and all employees with that plan would be fully vested. The company would begin contributing to a new retirement investment fund, essentially a 401(k), at varying rates: 10 percent of pay in 2016 and 2017, 6 percent in 2018, and 4 percent thereafter.
• Workers participating in a present 401(k) plan would get increases in the company’s match.
• Starting in 2016, workers 58 and older may retire with the full benefits of the old pension.
• New employees or rehired workers would receive a company retirement contribution of 4 percent.
• There would be increased employee premium contributions, higher deductible levels and greater co-pays for medical insurance.
• There would be 1 percent general wage increases in 2016, 2018, 2020 and 2023. Additional cost-of-living increases would continue as before.
• The contract in force now expires in 2016. The extension would last until 2024.
Q: What is Boeing promising in return for the concessions?
A: A letter of understanding states, in part, “the company will perform the final assembly of the 777X including 777X-8, 777X-9, and 777X-Freighter in Everett. The 777X wing fabrication and assembly work will be performed in Puget Sound. The parties agree that the company may subcontract or outsource certain 777X wing fabrication and assembly work packages, in whole or part, in order to create capacity for other 777X work packages in the Puget Sound facilities, and/or to efficiently utilize those facilities to accomplish the production and assembly of the 777X.”
Q: It looks like there’s a lot of wiggle room there. Couldn’t Boeing do 777X work elsewhere?
A: The company insists that 777X work in Washington would be assured and that there would be no layoffs due to outsourcing.
Q: Didn’t the IAM just get a new contract?
A: Yes. In late 2011, under similar circumstances, Machinists approved a contract extension to 2016 that ensured 737 Max work at the Renton plant.
Q: Why does Boeing want to revise the contract again?
A: Boeing wants labor peace for an extended period of time. In the not-so-distant past, contracts with the Machinists have lasted three years and have been punctuated with strikes or strike threats, disrupting the company’s ability to deliver airplanes — the major source of its revenue. Boeing also says it needs to reduce costs to compete with Airbus and other companies that are entering the transport-airplane sector.
Many union members think that the overarching reason is that Boeing simply wants to fatally weaken the IAM.
Q: If Boeing is threatening to move 777 work elsewhere because it’s cheaper, why doesn’t it just do so? Why bother with the Machinists here?
A: The company needs the skilled workforce here to successfully launch a new airplane program. One of the reasons the 787 had such a rocky beginning was the extent to which the company outsourced both the design and fabrication of major pieces and systems to companies unaccustomed to building them. IAM members here were greatly responsible for fixing those problems.
Also, building a new airplane factory from scratch and training a new workforce to assemble the most complicated mass-produced product in the world is not trivial. In North Charleston, S.C., where the company established a second 787 assembly line, Boeing had hoped workers by now would be building three Dreamliners per month. The actual rate is closer to one per month.
On the other hand, the company has indeed established a new factory elsewhere, and it’s learned a lot from that experience. Boeing says it’s not bluffing when it says it will look to other states, and no doubt it will if the contract ratification fails.
Some aerospace analysts and many union members expect that Boeing will shrug if the ratification fails and invite the union to the negotiating table.
Q: The buzz seems to be that the union membership really doesn’t like this. Why would the union’s leadership suddenly reveal this proposed contract without certainty that the members would be on board?
A: Excellent question — one that’s been posed by many union members, some of whom are as angry with the union’s leadership as they are with Boeing.
But it’s hard to tell how many members are actually planning to vote no. Critics of the deal have been very vocal, but that might belie the actual consensus. We’ll know for certain after today’s election.
Q: What about this air show next week?
A: Boeing is expected to announce the formal launch of the 777X program next week at the Dubai Air Show. That announcement will almost certainly involve one or more airlines — so-called “launch cutomers” — which would include Emirates Airline. The 777X is expected to enter service by 2020.
Locked-in labor peace with a skilled workforce would be nice to have before the air show to demonstrate to potential customers that the 777X will be developed and delivered on time — and with a minimum of defects.
Members of District 751 of the International Association of Machinists and Aerospace Workers (IAM) are voting today until 6 p.m. at five locations in metro Puget Sound and one in Portland. The union says ballot counting will be done at District 751’s headquarters in Seattle, with results to be reported sometime after 9 p.m.
Long lines were expected at polling places, and if past labor elections are an indicator, it could be well after 9 p.m. It’s possible results won’t be released before the deadline for The Herald’s Thursday print edition, so watch HeraldNet.com for the latest news.