A resounding no from Machinists
Boeing Machinists resoundingly rejected a deal that would have cut benefits but assured that production of the 777X would take place here.
Seattle Times aerospace reporter
Key moments for Boeing in Everett
1966: Construction begins on Boeing’s 747 Everett plant, which eventually becomes the company’s largest site. The facilities are expanded in 1978 and again in 1992.
1991: Boeing Chairman Frank Shrontz tells a business audience that rising costs in the Seattle area could make it “an aerospace rust belt in the 21st century, complete with padlocked factories, unemployment lines and urban blight.”
2001: After 85 years in Seattle, Boeing moves its corporate headquarters to Chicago. Gov. Gary Locke says Boeing told him “no amount of concessions would lead them to keep their headquarters here.”
2003: 22 states submit bids for a site to build the 7E7, later dubbed the 787 Dreamliner. The Legislature and Locke enact a $3.2 billion, 20-year tax-break package for the aerospace industry. CEO Harry Stonecipher confirms Boeing will assemble the plane in Everett.
2005: The Machinists’ first strike since 1995 ends after one month.
2008: Machinists strike for 57 days.
2009: Boeing says it will build a second 787 final-assembly line in North Charleston, S.C., after getting an incentive package from that state worth about $450 million, including $170 million in upfront money. The company expects to add 3,800 workers within seven years, bringing the Boeing-related complex there to more than 6,400.
2011: Machinists and Boeing agree on a four-year contract extension and production of the 737 MAX in Renton.
2013: Boeing says “detailed design” on the 777X will be done in engineering centers outside Puget Sound. Company and Machinists union leaders unveil a deal that assures the 777X will be built here if members approve an eight-year contract extension with significant changes to pension and health benefits, and a pay increase of 1 percent every other year, plus a cost-of-living adjustment. The Legislature and governor enact a package of tax breaks sought by the company.
Nov. 13, 2013: Machinists voted 2-1 against Boeing’s contract offer.
Source: Seattle Times archives
Ignoring warnings from Boeing and pleas from political leaders, members of the Machinists union Wednesday voted 2-to-1 to reject a contract offer that would have ensured the company builds the new 777X jet in Washington state.
Machinists threw out the proposed eight-year contract extension, unveiled barely a week earlier, because it was laced with cuts to benefits. Many members said they refused to be forced into a hasty and radical decision under a management threat that they would lose future work.
Blowing away the neutral public stance of International Association of Machinists (IAM) District 751 President Tom Wroblewski over the past week, his members delivered a resounding slap to Boeing.
But there was also anger at the union leadership for pushing the offer to a vote.
After Wroblewski and IAM national aerospace coordinator Mark Johnson announced the result at the Seattle union hall, the two were loudly booed by the several hundred Machinists present.
Wroblewswki retreated hastily to his office, trailed by loud insults as he walked briskly along. Then a message came down to waiting journalists that he would not speak to the media as had been previously arranged.
“Spineless,” said Todd Christensen, a union steward from Everett. “He needs to address the membership, not just give us a number and run away.”
JD Anderson, a 28-year veteran and quality inspector in Renton, said the union leadership “sold us down the river.”
“They should have never brought us that contract,” he said.
The vote leaves in limbo an incentive package, including $8.7 billion in new tax breaks over 16 years, that was hurriedly passed last weekend in a special session of the Legislature to comply with one of Boeing’s conditions to put the jet work here.
“Boeing came at us with a full frontal assault,” said veteran Machinist Jim Levitt. “We’re all outraged that Boeing is trying to pay South Carolina wages here when our workforce has saved their 787 program.”
“These were not minor changes to our contract,” he added. “To call this an extension of an existing contract is ridiculous.”
Robley Evans, a forklift driver in Auburn and IAM Local F vice president who helped lead the Vote No push, had a huge smile on his face.
“I couldn’t be more proud of my brothers and sisters. We stood against the wall,” said Evans. “We won. We saved our union tonight. That contract would have destroyed our union.”
Hazel Powers, 55, a tooling inspector in Auburn, said she voted no to defend the pension and to save new hires from a reduced wage structure.
“I’m not going to sell out,” said Powers.
What if Boeing places the 777X somewhere else? “Boeing is going to do what they are going to do,” she said.
Likewise, Sara Baumgardner, 23, a 787 mechanic in Everett, said, “If they move it, they move it. There’s no better place than Everett.”
Boeing Commercial Airplanes CEO Ray Conner said in a statement: “We are very disappointed in the outcome of the union vote. ... Without the terms of this contract extension, we’re left with no choice but to open the process competitively and pursue all options for the 777X. ... We had hoped for a different outcome.”
Boeing had repeatedly said that if the IAM vote went against it, the company would immediately seek other sites for the 777X project.
Sources close to Boeing said this week its analysis of alternatives focused on Long Beach, Calif.; Salt Lake City; and Huntsville, Ala.
Conner had emphasized Monday that this “isn’t a bluff.”
Dan Swank, a 17-year Boeing veteran who works on the Everett flight line and serves as a trustee in the union’s Local A unit, said he voted no although rejection could mean the plane isn’t built in Washington.
“It’s a very real possibility that the company could act suicidal again ... and move out of state, which doesn’t make any sense financially,” said Swank. He said Boeing CEO Jim McNerney “hates unions so much, that could happen.”
“We’ll fight those battles as they come,” said Swank.
In the hallway outside the count, Larry Brown, the union’s political director, looked disconsolate.
He had worked hard lobbying in Olympia to get the 777X incentives passed for Boeing. As the vote came out no, he expressed regret that because of the way this process has played out, “we will look like the bad guys, for protecting our pensions, and frankly for protecting our union’s existence.”
Asked if he was happy at the result, he said, “Happy is not the word. There’s nothing good here.”
Brown shrugged. “Hopefully Boeing will recognize they went too far and will come back,” he said. “They need to build that airplane here for it to be a success.”
Tensions within the union flared briefly in the corridor outside the count when an IAM member accosted official Joe Crockett, loudly accusing him of telling members in Auburn that the Boeing offer was a good deal.
Crockett denied that but said little else. It was Crockett whom the union put forward last weekend to speak to The Seattle Times, when he gave a positive spin to the Boeing offer as ensuring job security.
Looking for other locations for the 777 plant doesn’t preclude further negotiation with the state and the union.
Yet the vote leaves the future of the aerospace industry here on uncertain ground, with an estimated 56,000 jobs at stake.
Gov. Jay Inslee’s spokesman, David Postman, said the governor will try to find a way forward.
The governor defended the incentive package that he shepherded through the special session, which takes effect only if Boeing builds the plane here.
“This was the right thing to do, a bipartisan decision. I stand by it,” he said at a brief news conference Wednesday night.
He said that though Washington would have won the 777X with a yes vote, he knew Boeing would seek other competitive bids if the vote failed.
Now, he added, “We’re going to go out and compete” against the other potential sites.
Maud Daudon, president and CEO of the Seattle Metropolitan Chamber of Commerce and vice president of the Washington Aerospace Partnership, echoed that sentiment.
“Now we are going to have to compete even harder,” said Daudon.
The no vote was decisive enough that it probably cannot be reversed by sweetening the deal a little. Unless Boeing returns to the table with a significant shift in direction, the vote could kill Washington’s chances of building the new jet.
The consequence of that could be devastating to the state’s manufacturing economy. The massive plant in Everett could be half-empty as early as 2021 if the 777X work is lost.
The jet-maker is still set to launch the airplane with a big order from Emirates at the Dubai Air Show next week.
With Plan A now in disarray, Boeing may move quickly to convince customers it has a fallback. The work could be offered to other states as early as Thursday.
The 777X is a new version of Boeing’s hugely popular 777 twin-engine widebody jet, which is built today in Everett.
The new model, slated to enter service around 2020, will feature new fuel-efficient engines, larger even than the current 777’s enormous engines.
And while today’s 777 is metal except for its carbon-fiber-reinforced plastic tail, the 777X will add an advanced wing, the largest ever built by Boeing, made from that same composite material.
The plane is designed to defend Boeing’s current dominance in the large widebody market against the rival Airbus A350, which flew for the first time in June at the Paris Air Show.
As Boeing learned painfully on the 787 Dreamliner program, a failed manufacturing plan can create a business disaster. This time around, Boeing has to execute 777X smoothly and deliver on time.
Machinists believed the Everett plant’s expertise and existing infrastructure give them leverage over Boeing. The company saw it differently.
In the offer the Machinists rejected Wednesday, Boeing tried unsuccessfully to apply the leverage of the 777X work to radically change a pay and benefits structure that the IAM has defended for years.
In return for building the 777X jet and fabricating its wing in Washington, Boeing sought dramatic cuts in its long-term costs — and certainty that there would be no Machinist strikes through 2024.
Key elements of the rejected contract proposal included:
• The deal would have ended contributions to the employees’ traditional pension plan in 2016, freezing the pension for current employees and eliminating it for new hires.
This pension was to be replaced by a company-funded, defined-contribution retirement-savings account.
The company would have added 10 percent of gross salary to this account for two years, 6 percent the third year and 4 percent every year thereafter.
• In addition, the company had offered to increase its match in the separate 401(k) account that the Machinists currently have, from up to 4 percent of the employee contribution to up to 6 percent.
• The proposal also would have increased employee health-care premiums and copays.
• New hires would have moved up the pay scale much more slowly than they would under the current wage structure.
• Wages would have increased just 1 percent every other year, on top of an annual cost-of-living adjustment.
• And all members would have gotten a $10,000 signing bonus before Christmas.
But the Machinists rejected that enticement in favor of protecting their longtime benefits.
“This contract is nothing but take-aways,” said Omar Abdul-Alim, a 23-year Boeing mechanic in Renton. “It will take away everything we negotiated for in the past.”
Abdul-Alim said his grandmother, Arlene Acrey, an African-American “Rosie the Riveter” during World War II and now in her 90s, told him to go fight for what he thinks is right in Wednesday’s vote.
He voted no.
Seattle Times reporters Coral Garnick, Sanjay Bhatt, Alexa Vaughn and Alisa Reznick contributed to this story.
Dominic Gates: 206-464-2963 or firstname.lastname@example.org