Boeing Continues Expansion Away From Seattle

By Guy Norris
Source: Aviation Week & Space Technology
December 23, 2013
Credit: Boeing

Bold and tough decisions are as much a part of running a successful large commercial aircraft business as careful design, engineering know-how and a good market. That is the underlying message from Boeing Commercial Airplanes' (BCA) leadership as it closes on a $10 billion choice over where to build the next-generation 777X, its future long-haul, high-capacity flagship.

But while Boeing saw the 777X site decision as an opportunity to leverage a lasting industrial agreement with the machinists union at its traditional Everett, Wash., site, the International Association of Machinists and Aerospace Workers (IAM) had other ideas. The union's rejection in November of a long-term contract extension offered in exchange for guarantees of 777X work in the Puget Sound area put the company on a search for a site that has since taken on a life of its own. From an initial pool thought to consist of three existing Boeing sites in Alabama, California and South Carolina, the 777X contest has widened to attract a greater-than-anticipated number of bids from 22 states eager to build the aircraft at a choice of up to 54 different sites across the country.

However, just as interested states rushed to submit their bids by the mid-month deadline, talks between Boeing and the IAM were unexpectedly revived on Dec. 9. This time Boeing's improved offer included an additional lump sum bonus of $5,000 per employee to the $10,000 signing bonus offered originally. The revised offer also included more benefits, dropped a proposal requiring employees to pay 33% more in their health-care premiums and retained the current rate at which employees accelerate to the top of the pay scale.

But the improved Boeing offer retained the original proposal to replace the current pension with a partially company-funded savings account program. This emerged as an insurmountable obstacle and almost as soon as hopes began to rise of a deal to secure the work at Everett—current home of the 777—they were dashed on Dec. 12 when talks failed. The outcome further soured what has been widely described as an already “toxic” relationship between Boeing and the machinists union. Unlike the first offer, which was voted down by IAM members on Nov. 13, Boeing's “best and final counterproposal” was rejected by the union leadership, adding a further twist to the divisive negotiations.

BCA President Ray Conner said, “We have listened to the union leadership and had an open dialogue in hopes of moving toward each other. Unfortunately the offer, which would have ensured this great airplane for the Puget Sound region, was immediately rejected by the union leadership.”

Conner clarifies that Boeing did not withdraw its proposal after union leaders turned it down. “That's not the case. It was a rejection, plain and simple, and we now have to turn and face the reality of the union leadership's final decision.”

District 751 President Tom Wroblewski countered by saying that despite wanting to offer the manufacturer 16 years of guaranteed industrial “peace,” Boeing's demands were “too high.” He added, “Our senior leadership team could not recommend Boeing's counteroffer.” Reports from Everett, however, indicate a growing split between the union's leadership and the rank-and-file over the manufacturer's sweetened proposal. Some members have pushed for a new ballot; Boeing declines to comment on whether further talks with the union are even being considered.

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