777X In Danger: Machinists Reject Boeing Contract
In a vote that could ultimately move Boeing out of Washington state, Boeing's machinists rejected the company's proposed contract, with 67 percent of union members opposed.
Members said they are calling the aerospace giant’s bluff – they expect the company to renegotiate the contract deal instead of building the 777X jet somewhere else. At least 20,000 area Boeing jobs are at stake.
The machinists booed union leaders when the results were announced – they argued the union should have rejected the contract in the first place and not put it to a vote.
Tracy Smith, a machinist with Boeing for 28 years, said he voted no on the contract even though he would have benefited from it.
“I’m going to retire in two years; I could take $10,000,” Smith said. “I could take the early retirement benefits that are coming. But I’m a unionist and I would never sell out people coming in behind me to divide our union, where we get something but we take something away from the people who are going to be working right next to us in five years. I’ll never do that, it’s like selling your soul.”
The vote, which was closely watched by state lawmakers, was about more than just compensation for the 31,000 machinists. Boeing had repeatedly threatened that it would move production of the 777X out of state if the machinists didn't approve the contract.
Voting against the contract was a gamble, and Scott Hamilton of Leeham Company doesn’t believe it will work.
“I think Boeing just throws up its hands and goes elsewhere,” Hamilton said.
After the vote results were released on Wednesday night, Boeing Executive Vice President Ray Conner released a statement saying he was "very disappointed in the outcome." He reiterated that the company would look elsewhere to produce the 777X.
"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," Conner said.
Under the proposed eight-year contract, Boeing would stop contributing to the machinists’ pensions in 2016, and workers’ health care costs would increase. If the machinists had approved the contract, they would have received a $10,000 bonus by the holidays.
Whether the company was bluffing ahead of the vote was difficult to gauge. The machinists in the Puget Sound region are highly skilled, a fact highlighted by the delays and technical problems that turned the 787 Dreamliner – whose parts were built in South Carolina, Everett and around the world – into a public relations nightmare.
The 777 has been good to Washington’s workforce so far. Twenty-thousand Boeing employees – a quarter of the total workforce – work on the popular, wide-body, long-range jet.
Gov. Jay Inslee has repeated that he hopes to keep Boeing in Washington as it starts to build the 777X, the more fuel-efficient sibling of the 777. Boeing’s launch of the plane is expected this month, and an announcement of where the airplane will be built is expected to follow.
Lawmakers tried to sweeten the deal over the weekend, promising Boeing $9 billion in tax breaks through 2040 – so long as the company promises to keep production in state.
'Piece Of Crap'
In a statement on Wednesday night, Machinists District 751 President Tom Wroblewski praised union members.
"We preserved something sacred by rejecting the Boeing proposal," Wroblewski said. "We've held onto our pensions and that's big. At a time when financial planners are talking about a 'retirement crisis' in America, we have preserved a tool that will help our members retire with more comfort and dignity."
Union leadership had wavered between being vehemently opposed and tepidly in favor of the proposed contract. Wroblewski dramatically tore up a copy of the proposed contract last week, saying he would try to prevent it from going to a vote.
“I know this is a piece of crap,” Wroblewski said, according to The Seattle Times.
But the next day, the International Machinists union said that theatrics aside, it would go ahead with a vote.
Richard Aboulafia, an analyst with the Teal Group in Washington, D.C., told KUOW last week that he doesn’t believe Boeing has much leverage.
“The reality is there are huge advantages to Boeing in keeping 777 assembly in Puget Sound. Logistically, it would be very difficult to move it elsewhere,” he said. Still, he added that the union’s reaction last week “has given them probably a lot of resolve to get out of Dodge.”
Leeham’s Hamilton agrees that bitterness resulting from this contract negotiation could drive Boeing to move more production out of state.
“That’s really a huge blow to the future of aerospace in Washington,” he said. “The governor and the Legislature are really going to have to think long and hard about how they’ll maintain an aerospace cluster here.”
Counting The Votes
Starting at 5 a.m. on Wednesday, Boeing machinists arrived at union halls across the Puget Sound area and in Portland, Ore., to cast a vote that could determine the aerospace giant’s future in Washington state.
Most were middle-aged men, grim-faced, wearing blue jeans, hooded sweatshirts and fluorescent yellow reflective vests.
Many arrived in small groups by car, entered the nondescript union hall and voted on a blue card that asked them to check a box saying whether they “ACCEPT” or “REJECT,” the proposed contract. They then slipped the card into a garbage bin that was sealed shut with tape.
Few seemed to have a sense of how the vote would turn out, and several expressed frustrations about union leadership.
Around 10:30 a.m., a larger group showed up with their signs, chanting, “Vote no! Vote no!”
On KUOW’s Facebook page, some revealed how they would vote.
Ken McClow wrote on Tuesday that he would vote in favor of the contract: “I believe if we vote no, there will not be future generations of machinists in Everett. I’m willing to take this hit and live to fight another day. I do consider this a betrayal by the company and the union.”
Lori Thompson wrote that her machinist husband would oppose the contract because they want to keep his pension and avoid a hike in health care costs.
“We want to keep the raises,” Thompson wrote. “Does this make us greedy, some will say yes. However, this is why we uprooted our family from Michigan when the auto industry failed. To work for a company that supported and treated its employees well. We aren't looking to get rich. We are looking to live a decent life. I feel that Boeing is using scare tactics and bribery to get people to vote yes.”
KUOW's Jason Pagano and Ruby de Luna contributed reporting. Produced for the Web by Isolde Raftery.