It’s a deal: Boeing to build 777X in Washington

  • By Chuck Taylor and Jerry Cornfield Herald Writers
  • Wednesday, November 6, 2013 7:52am
  • BusinessEverett

EVERETT — The first Boeing Co. 777X would take off from Paine Field here under terms of a tentative agreement between the company and the Machinists union.

The International Association of Machinists and Aerospace Workers (IAM) said Tuesday that the 32,000 members of IAM District 751 will vote on an eight-year contract extension, which wouldn’t expire until 2024. If members approve it next week, the pact will provide “an unprecedented degree of labor stability in the volatile and competitive industry.”

Boeing, in turn, will build the 777X, a revamped version of the company’s popular wide-body jetliner, in Everett and will build the plane’s new carbon-fiber-composite wings somewhere nearby in metropolitan Puget Sound, the union said in a news release.

About an hour after the IAM announcement, the governor called for a special session of the Legislature to begin on Thursday, with Boeing-friendly legislation on the agenda.

He said Boeing officials have assured him in “clear, unequivocal and concrete terms” that the 777X and its carbon-fiber wing will be built in Washington if lawmakers approve the package and the union ratifies the contract extension.

“It is a lead-pipe cinch that we will land this airplane if we do the two things we need to do,” Inslee said.

Late Tuesday, Boeing Commercial Airplanes President and CEO Ray Conner, who attended Inslee’s news conference but did not speak, issued a written statement lauding the tentative deal.

“This is important to everyone with a stake in Boeing — including our employees, the community and our customers — and we look forward to the ratification and a long successful future as the global leader in aerospace,” Conner said.

The deal hinges on big concessions by the union, and it remains to be seen how the rank and file will react.

The amended contract includes “cessation of pension accruals for current employees and the establishment of an alternative company-funded retirement plan,” the union said. “Additionally, within 30 days of ratification, all members would be paid a $10,000 signing bonus.”

Those terms might be a hard sell, and the IAM news release seemed to anticipate that. Tom Wroblewski, District 751’s directing business representative, added: “Only a project as significant as the 777X and the jobs it will bring to this region warrants consideration of the terms contained in Boeing’s proposal. While not all will agree with the proposal’s merits, we believe this is a debate and a decision that ultimately belongs to the members themselves.”

There will be one day of voting by IAM members — next Wednesday, Nov. 13.

“Securing the Boeing 777X for the Puget Sound means much more than job security for thousands of IAM members,” Wroblewski said in the IAM news release. “It means decades of economic activity for the region and will anchor the next generation of wide-body aircraft production right here in its historic birthplace and will complement the 737 MAX narrow body.”

Later, in Olympia, Gov. Jay Inslee announced the special session while surrounded by lawmakers, Conner and union leaders, including Wroblewski. Also in the group were Everett Mayor Ray Stephanson, Snohomish County Executive John Lovick and Bob Drewel, the former county executive Inslee tapped to help coordinate efforts to land the 777X work.

“I am asking lawmakers to pass a package of legislation that will guarantee that the Boeing 777X and its carbon fiber wing are built in Washington state,” Inslee said. “If we can do this in the next seven days, we can be certain that Washington’s aerospace future will be as bright as its past.”

Inslee has been working with a bipartisan group of legislators in recent months to craft a package of transportation, education and tax measures to help convince Chicago-based Boeing to build the 777X in the state. Those plans will move forward, even with Boeing’s apparent agreement to build the plane here.

“Now we have a commitment on this project,” the governor said. “These jobs are ours if we act now.”

Neither Conner nor Wroblewski spoke or would answer questions, even though they negotiated the deal between Boeing and the Machinists.

But in his written statement later, Conner praised Wroblewski “for his leadership, vision and determination to forge an agreement of historic proportion that, when ratified, will secure and extend thousands of high-wage, high-skilled aerospace jobs and expanded economic opportunity for residents of Puget Sound and Portland for many years to come.”

“Tom and his team pressed hard for an agreement that maintains market-leading pay and benefits for the members he represents, while also recognizing the critical importance of our efforts to achieve increasing competitiveness in order to win against a growing list of global competitors,” Conner said.

Stephanson, who has been the most prominent local leader in the effort to woo Boeing, said in a separate statement: “Boeing is part of the fabric of our community. They have long been a vital part of our economy, and help support more than 200 aerospace suppliers in Snohomish County alone. But Boeing is more than just an economic force. Today’s announcement represents security for our families, opportunities for our students and a continuing legacy as the home of the world’s premier aerospace company.”

The IAM represents 30,590 assembly mechanics and other workers in Everett, Renton and other Washington locations, as well as 1,500 workers in Portland. In all, Boeing employs 84,013 workers in Washington out of a worldwide workforce of 170,820.

Boeing also assembles jetliners in North Charleston, S.C., but the 787 line there has been in operation for less than two years and output has been modest.

The union does not represent workers in South Carolina, which is a right-to-work state. Boeing in 2009 decided to establish the second 787 line there after a 57-day strike by the IAM in the Northwest in 2008.

But as the company planned the next iteration of the 737, which is built in Renton, the two parties quietly worked out a new contract — the one approved in 2011 and now being amended to expire in September 2024.

South Carolina had high hopes of landing 777X final assembly, offering the company tax incentives to expand beyond the 6,789 workers there. And Boeing has been accumulating real estate at its complex adjacent to the Charleston airport — an apparent signal that it planned to expand. It might still. But not to build the 777X.

Chuck Taylor: 425-339-3429; ctaylor@heraldnet.com.

The special session

Gov. Jay Inslee is calling lawmakers to Olympia on Thursday for a special session. He wants them to pass measures that include:

• A $10 billion transportation package, anchored by a 10-cent increase in the gas tax.

• Extension of commercial-airplane tax incentives until 2040, first enacted to convince Boeing to build the 787 here.

• Millions of dollars in education and workforce development spending to boost enrollments in aerospace fields at community and technical colleges.

• Streamlined permitting for large manufacturing sites.

• New water quality goals — linked to the average fish-consumption rate — that industry can live with.

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