Pensions on way out for some time

Defined benefit pension plans have been on their way out for some time. Regardless of how profitable a company is, it cannot afford such a large financial burden. The Machinists and their local elected leaders don’t want to recognize this and are determined to demand their defined benefit pension plan.

Should the Machinists vote down the proposed contract, I expect the following will most likely be Boeing’s reaction. The company will offer much the same contract as the one to be voted on Friday in 2016 when the current contract expires. The company will expect the Machinists to again reject a defined contribution retirement plan and push for a defined benefit retirement plan. The company will anticipate a possible strike by the Machinists and factor in the money it will save should a strike occur. The savings will be significant because Boeing typically incurs no late aircraft delivery penalty if the delay is due to a strike and the company doesn’t pay wages to employees walking a picket line. We’re talking millions and millions of dollars in Boeing savings and Machinist wage losses.

These millions in Boeing savings will be taken into account in the decision of where to build the 777X. This may well be a decisive factor in moving 777X production to a state other than Washington. (The state will most likely be a “right to work” state.)

Should all this occur, the Machinists will have little bargaining power in 2016 because 777 production will be phased out sooner rather than later. (Airlines will request an order change from the 777 to the 777X as 777X delivery nears.) In this scenario the Machinists will be the losers as will the state of Washington.

The only reasonable thing for the Machinists to do is vote for the contract on Friday.

Susan Kramer


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