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Boeing Machinists Approve Contract Tied to 777X

Stocks in this article: BA

By Manuel Valdes

SEATTLE -- The stakes were high and the vote was close as Boeing production workers agreed to concede some benefits to secure assembly of the new 777X airplane for the Puget Sound region.

Washington Gov. Jay Inslee and Boeing hailed Friday's vote, which proponents said solidifies the aerospace giant's presence in the Seattle area.

"Tonight, Washington state secured its future as the aerospace capital of the world," Inslee declared.

Under the terms of the eight-year contract extension, Boeing said the 777X and its composite wing will be built in the Puget Sound area by Boeing employees represented by the Machinists union.

"Thanks to this vote by our employees, the future of Boeing in the Puget Sound region has never looked brighter," Boeing Commercial Airplanes President and CEO Ray Conner said. "We're proud to say that together, we'll build the world's next great airplane -- the 777X and its new wing -- right here. This will put our workforce on the cutting edge of composite technology, while sustaining thousands of local jobs for years to come."

Local officials of the International Association of Machinists and Aerospace Workers had urged their 30,000 members to oppose the deal, arguing that the proposal surrendered too much at a time of company profitability. They had opposed taking a vote at all but were overruled by national leaders in the Machinists union.

The announcement that the contract had passed with a 51% yes vote was somber.

"Our members have spoken and having said that, this is the course we'll take," Jim Bearden, administrative assistant for Machinists District 751, said in announcing the results. "No member liked this vote or the position we were put in by the company, nor was it an easy vote for anyone to cast."

Opponents of the contract opposed the idea of freezing the Machinists' pensions and moving workers to a defined-contribution savings plan.

The issue fractured the union and drew unusual pleas from politicians who said the deal was necessary to support the area's economic future. Boeing has been exploring the prospect of building the 777X elsewhere, a move that could trigger a steady exodus of aerospace jobs from the place where Boeing was founded.

"We missed it by 1% because people were confused and worried about their jobs," said Rick Herrmann, who has been working at Boeing for 46 years.

Hazel Powers and Dena Bartman lingered at the Seattle union hall after the results were announced, their eyes swollen from crying. Powers described a solemn mood after the announcement.

"Shocked. Disbelief," she said.

"I'm still just numb," Bartman said.

Powers has worked for Boeing for almost 35 years, while Bartman has been there for 25 years. Her 25-year-old daughter has worked at the aerospace giant for seven years.

"I think people that voted for it were scared," Powers said. "The pressure from the politicians and the community -- people are scared about not having good-paying Boeing jobs."

Bob Dennis, an inspector at Boeing for six years, said earlier in the day he was voting for the contract because it represented the best chance to keep the 777X jobs in Washington state.

"I don't think Boeing had to come back to the table," he said. "We forced them that way. But at the same time, I think this is our last opportunity to keep those jobs in the state."

U.S. Sen. Patty Murray, D-Wash., said, "The tough vote taken by the Machinists today means the 777X will be built in the only place it should be, by the only people prepared to deliver."

She added: "I know well this decision wasn't easy for any of the Machinists or their families, and I know that many of those men and women decided Boeing's latest offer was still unacceptable. Their concerns about income and retirement security for current and future generations of aerospace workers -- and all American workers -- are legitimate."

Bearden, speaking in place of District 751 President Tom Wroblewski, who has been ill, said Boeing production workers "faced tremendous pressure from every source imaginable." He took a dig at "the politicians and the media, and others, who truly didn't have a right to get into our businesses, were aligned against us and did their best to influence our folks' votes."

Machinists International President Tom Buffenbarger, who forced the issue to a vote over the objections of local union leaders, said in a statement that "the impact of this agreement extends far beyond IAM members who voted today."

"For decades to come," he said, "the entire region will benefit from the economic activity and technological innovations that will accompany" the jet production.

Washington state has always been the most natural place for Boeing Co. to build the 777X, since most of the company's production is still done in the Puget Sound area. Chicago-based Boeing offered to keep the 777X in the region but sought two big deals: An extension of tax breaks all the way to 2040 and a new contract with the Machinists union that would transition workers away from traditional pensions.

In November, state lawmakers swiftly approved the tax benefits -- valued at some $9 billion -- but the Machinists rejected a proposed contract shortly afterward. After the initial contract rejection, Boeing immediately began soliciting bids from other states. The company said it received submissions for 54 locations in 22 states.

The competition has underscored Boeing's commanding bargaining position in an economy where top-notch manufacturing jobs remain scarce and elected officials feel obligated to aggressively pursue such opportunities.

Boeing improved its offer after the last vote by machinists. An initial plan to slow the rate that workers move up the pay scale was tossed while the company also offered $5,000 in additional bonus money and improved dental coverage.

In addition to the pension issue, opponents decried increased health care expenses and slower wage growth. However, some machinists will likely see their base salaries rise above $100,000 under the new agreement.

Boeing began offering the 777X in May, and company officials have said they needed to move swiftly to decide where the plane will be built.

The company recently received orders for 225 new 777X planes from three airlines at the Dubai Airshow.

Boeing has said the 777X is expected to carry as many as 400 passengers and be more fuel efficient than the current 777.

Associated Press writer Mike Baker in Seattle and photographer Elaine Thompson in Everett contributed to this report.

Copyright 2013 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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