Boeing, 777x, and Machinists Union

[haha]

I know some people on here have labor/management negotiation experience. I find the recent rejection of a new contract that Boeing claims it needs to build the 777X in Seattle area very odd. Machinists sent it down by a 2/3 majority. They still have a contract in place until 2016, so nobody is hurting right away, and Boeing does not have a gun to it's head.

A big part of the new deal was to be no more DB pensions for new hires; replacement by defined contribution with good matching. I think but am not sure that further contributions toward the accounts of current machinists were to be made to a 401K instead. There was also to be a $10,000 signing bonus.

It has been said that passage of that contract world have kept the 777x line going in Everett for at least a generation. So even very young workers could count on these extremely good blue collar jobs for the rest of their careers, right here at home.

The Democratic governor made pledges of $8.xx bln in tax abatements, and most people expected a yes vote. I saw some interviews with the workers after the vote. Many of them seemed confident that Boeing would return to the table before any definitive steps were taken. They stressed the very rocky experience of the 787 down in North Charleston, and the idea that no one else can build planes with the low error rate of our local plants. But Boeing said not so fast, we are done with negotiations until 2016 when the current contract is up. Meantime we are evaluating all our options. I would expect them to make plans to at least start one line elsewhere, and maybe a bigger commitment before 2016. So any negotiations after that contract is over seems to me would put Boeing in a much stronger position, as the workers might start losing their houses, but airplane building will go on.

I think the Machinists overplayed what was admittedly a good hand- on a contract that the professional engineers had already OK'd. Boeing has been humiliated by the 787 start, the fires, the delays, etc. Therefore corporate needs this new plane to get done on time, and done right. Still, there is Japan, where wings will be made anyway, there is Long Beach with a long history of successful airplane building, there is Texas, and of course South Carolina is learning more every day, and 787 production is not going to leave there.

I also think that Boeing is tired of paying what they consider to be very good salaries and benefits, and still getting held up periodically. If there are better large scale manufacturing jobs any where in the country, I do not know where or how.

I should add that many local businesses have a big stake in seeing planes made here. Not just suppliers, but everything from restaurants to Karate Studios. Puget Sound and especially Seattle will never be the same as they were in the 60s and 70s, but these Boeing jobs are still very important

Comments? How do others, locals and not, see this?

Ha

[CCdaCE]

It seems this day in age, the first offer is never accepted regardless of validity. Always haggling for more, and ending up worse off than the starting point, after possibly years of "negotiations". Local sugar processors haggled for about 3 years and the employees seemed to have gotten screwed, but many non-union would argue that's what needed to happen (to stay profitable?). I'd like to see the math, but never dug into it - no vested interest.

Just tough to take when the concessions end up being very minimal and things like the CEO pay red herring keeps bearing itself.

-CC

[pb4uski]

Spot on Ha.

Seems to me that as a result of their greed the workers will be hoisted with their own petard, but only time will tell.

[ls99]

While Boeing had some trouble with the South Carolina manufacturing of aircraft, That is now a past event. Moving the 777X assembly to a right to work state has many benefits. By now the South carolina work force has experience and am sure learned from the past errors.

I see the Machinist union members getting themselves shafted akin to the Teamsters in PA many years ago , when Caterpillar made their moves, and bunch of staunch unionists were out jobs that were never replaced by anything paying nearly as much. Most found jobs at minimum wage if at all.

It sure looks to me the union overplayed their hand, and will come up with a bunch unemployed members.

[bld999]

Whether this particular vote result was smart for the machinists or not is beyond my limited view of the situation. I am local, but have no personal stake in the matter, but I was brought up short one day when Foxconn, the electronics assembly giant reported that it will attempt to completely automate it's operation. This is on top of relatively inexpensive labor as the incumbent.

Headquarters left for Chicago sometime back. Computer power and software advances allow fairly competent info exchange with remote subcontractors. Puget sound is an expensive place to live, and to do business, particularly transportation if you deal in physical goods. Governments can distort the costs through policy and one time "gift cards" but eventually, I think the machinists will slip toward compensation parity with lower cost regions.

Is the slippage measured in simple time or airplane models? I can't tell.

[MikeTN]

I live in Oak Ridge, TN. We had a small Boeing plant which made aircraft parts. The union workers went on strike. Reportedly, the main issue was that the company wanted to let a non-union supplier deliver things directly to the line instead of leaving them at the loading dock. There were some other minor issues as well. The union guys sat in lawn chairs outside the plant for a few months. Then Boeing said it was closing the plant and moving the production elsewhere. This was just a few years ago.
It seems possible that the union members who voted against the contract are overestimating their bargaining power, just as these workers in our town did.

[haha]

I think the last unions that can absolutely shut down operations may be the public unions.

Notice how the teachers always pick late summer, just as school starts to get very concerned about "the children"? What the heck are Mom and Dad going to do, lose their jobs to stay home and take care of little Bobbie and Susie?

Ha

[Midpack]

Few if any of us know enough to comment, time will tell. But conceivably more than ever, all workers, white & blue collar, tend to overestimate how "indispensable" they are. I'm grateful I'm not 21 in today's workplace...

[haha]

Quote:

Originally Posted by Midpack Few if any of us know enough to comment, time will tell. But conceivably more than ever, all workers, white & blue collar, tend to overestimate how "indispensable" they are. I'm grateful I'm not 21 in today's workplace... /he is certainly qualified to have an opinion on something like this.

I'd say if someone feels qualified to vote, s/he is certainly qualified to comment here.

[ziggy29]

I think some of this (and the increasing unpopularity of unions) stems from the notion that when unions get wage, benefit and working condition concessions, it rarely "trickles down" to the non-union shops any more. Once upon a time, when unions were fighting for things like 40-hour work weeks, pensions and medical benefits, even many non-union employees rode their coattails and got these things as well. In a sense, unions were "fighting" for *all* of the working class. At this time, public support of unions was much higher and it was a harder sell, politically, to "bust" unions or promote right-to-work laws.

Today, what the unions get no longer trickles down to the rest of the work force, and as a result resentment of unions grows. I think it's unfortunate since it promotes an us-versus-them divide in the working class, but it is what it is.

I don't know what the answer is and I don't want this to go off the rails with politics, but I do think at least some of the decline of unions and resentment of the "union deal" stems from the fact that if you aren't in a union (and especially in the non-union private sector), you just don't get that deal any more and you feel like you are paying for their deal which you no longer get, either in the form of higher product prices or taxes.

People much didn't resent union and/or public sector benefits and the like when they were also receiving them.

[Katsmeow]

I have mixed feelings about this. First, I found it surprisingly difficult to find out the terms of the proposal.

I finally relied on this one:

Machinists to vote on Boeing contract that would put 777X work in Washington | The Columbian

It seems that the main things are: stopping pension accrual for current employees, replacing with a contribution plan; much higher health insurance premiums (I read somewhere 30% higher) and taking 16 years (instead of 6) to get to the top of the wage scale.

One reason I have a hard time with this is that living where I live unions in the private sector aren't common. So I am more used to the company just decided to do stuff like this and the workers get zero input into it.

On the other hand, I have mixed feelings because I do think that many corporations are squeezing workers for reasons of management greed and not in order to keep a company from going under. I understand a company wanting to cut costs so it can remain a viable entity. But I have a hard time with a company cutting costs at the expense of employees while compensation of high level executives just goes up and up.

However, none of that has anything to do with whether the machinist's were smart to reject the contract.

From a practical standpoint I would say that if Boeing moves the jobs to another state then these workers will undoubtedly end up worse off.

They are gambling that Boeing can't find the expertise to do these jobs elsewhere. I don't know how good a gamble that is.

If the workers are right and Boeing can't easily move these jobs then rejecting the proposal to try to get a better one makes sense. On the other hand, if they are wrong and Boeing can move the jobs and does move them, then these workers will almost surely end up worse off than they would have if they accepted the proposal.

[Chuckanut]

Boeing moved its headquarters to Chicago years ago. IMHO, they have no particular loyalty to any part of the country or to any country. I think the machinists made a mistake. Now we will see if the new governor can pull a rabbit out of his hat and get the two sides to agree. The union may have been greedy, but, OTOH, Boeing cannot afford another mess like they had with the 787. I wonder what benefits Airbus employees get? That would make an interesting comparison.

If Boeing moves to another state, Washington should use at least some of the tax benefits it would have given Boeing to attract other businesses and diversify the economy further.

[HFWR]

I hope they can all come to an agreement, even if they must hold their noses.

[supernova72]

The OP described this very accurately. It's a pretty senstive subject here in the great NW and state of WA. Besides the $8.7B tax incentive pkg there was going to be another $10B transportation pkg asking for help with roads, etc around here. So for the state some big bucks on the line to help keep the 777-X in Everett through at least 2024.

I'm hearing the IAM union folks felt pressured by the IAM leadership to vote Yes and only gave them a week to digest the changes that were in the new contract proposal. Yes, those changes in benefits were significant with the DB pension ending in 2016 and replaced by a regressive 10%, 8%, 6%, then 4% thereafter savings plan. However, they also enhanced the 401K match to 75% on the first 8% from the current match of 50%.

On the medical changes those claims of costs going up by 300% are inflated in my humble opinion. Like maybe a co-pay would go from $10 to $30 at some point. Many folks at Boeing pay no premiums for HC and there deductible is ~ $300 annually.

Most of you know this but the rest of Boeing (Engineers, IT, Finance, HR, etc.) already pay these additional medical costs (this is 140,000 folks out of 170,000). In addition newhires for the rest of the non machinists don't get a pension either. Guess what I'm saying is the rest of the non machinist workforce have made these concessions actually back in 2009. SPEEA (Engineers) more recently but no pensions for new hires there either.

I was given advice early on by a mentor of mine to choose your battles carefully--

This is one battle I don't believe the exec team is bluffing on. After the strike of 2008 the leaders said "there will never be another work stoppage on my watch". Within three months they purchased many acres of land in South Carolina.

Just saying...

Lets hope for the best. The workforce here is very skilled already making the 737, 747-8, 767 tanker, 777 current, and the 787 (one line plus a "surge line"). SC has the 2nd line for the 787.

[haha]

Quote:

Originally Posted by Chuckanut Boeing moved its headquarters to Chicago years ago. IMHO, they have no particular loyalty to any part of the country or to any country. I think the machinists made a mistake. Now we will see if the new governor can pull a rabbit out of his hat and get the two sides to agree. The union may have been greedy, but, OTOH, Boeing cannot afford another mess like they had with the 787. I wonder what benefits Airbus employees get? That would make an interesting comparison.

I see this pretty much exactly like you have laid out. The machinists are risking a big loss, truly a life changing loss, for a real gain, but overall the pot does not appear to be worth the bet. Not much would change for a while, it's the intermediate and longer term that might be different.

I also agree that Boeing cannot afford a debacle like the 787 has been so far. So both sides have a real stake, but it appears to me that the machinists have fewer options. The Machinist's Union early on had advised a yes vote, but as it became clear that was not going to happen they got on board with the rank and file.

Boeing and Airbus are a duopoly, and historically Boeing has had the upper hand. This could be a big loss for our region, our state, and likely also the USA.

Your idea of a brokered settlement is interesting. The company would need to be seen as seriously looking at other plans. And certainly the political problems might be intense. If Governor Inslee were able to pull something like this off, he would gain a huge popularity with the voters. people may forget that all the great software jobs that have come along in the last 30 years will not be able to absorb a large, well paid manufacturing workforce. One thing is like what Supernova alluded to- Boeing mgmt. appears to be kind of fed up with this union

Ha

[2B]

Having grown up in the Seattle area and having a brother and father that worked for Boeing at one time (both hourly), I guess I have the right to comment. Boeing has an old style militant union and the machinists union is probably the worst or most aggressive depending on your perspective. Decades ago when I lived up there, traffic was already horrible and moving subassemblies between plants was a major obstacle. Realistically, Boeing should have addressed their logistics back in the 1970s. It could have been not having their plants surround Seattle by moving to a more remote area to consolidate everything. The other choice would have been to move out of Seattle to another location. The way it was and is organized around Seattle is a disaster that will continue to be horrible.

I don't think Boeing missed a beat with their 777 problems. Yes, it was lots of bad publicity but they sold and delivered many airplanes. The 777X is an evolution of the same general design which won't have the same type of challenges. Also, Boeing learned a lot over the last few years in how to set up a new site.

Boeing is no longer committed to the Seattle area. There may be a lot fewer Boeing employees in the area in another 10 years or so. The question is whether the Dept of Labor will make life as difficult for Boeing to make the move with the 777X as they did for the 777.

[2B]

Quote:

Originally Posted by ziggy29 I think some of this (and the increasing unpopularity of unions) stems from the notion that when unions get wage, benefit and working condition concessions, it rarely "trickles down" to the non-union shops any more.

In the Houston area, I told the operators and maintenance hands that the should encourage their friends at the union plants to strike for higher pay and benefits but there's no value in them joining the union. All the non-union companies maintain parity with the other plants whether they are union or not. The union plants getting raises by being out on strike for 9 months helps the non-union worker. The union workers lose 9 months of pay and the non-union worker gets paid as usual.

[Buckeye]

I thought the 'no' vote just meant that Seattle now had to bid for the work instead of being handed the work. I took that to mean that each location would bid on the 777X and the site with the best numbers would win the work.

[Lsbcal]

Quote:

Originally Posted by haha Comments? How do others, locals and not, see this? Ha

First a question for Ha. Are you asking because you are invested in Boeing or because you are a concerned local? Or both?

My take: Boeing represents about 0.1% of our portfolio. Small potatoes indeed. I'm glad I don't have to worry from that perspective.

From a US centric position I don't know what is in the best interests of the country with Boeing as a leader in aviation. I'd like us to keep leading the world in this area. I'm not in Seattle so it's not a regional issue for me. I wish the Seattle citizens well on this one.

I've probably bored a lot of people on this thread.

[Midpack]

The IAM's summary of the (now rejected) contract proposal FWIW.

http://www.iam751.org/pages/t2013/Pr...Summaryweb.pdf