Analysts Say Boeing Is The Most Likely Winner In Union 'Civil War'

The national leader of the International Association of Machinists is urging members of Local 751 to approve a new contract offer from Boeing when it comes to a vote January 3, but the local's leaders are urging that the contract be defeated because it is too similar to a deal they had rejected in November.

In a letter sent to members who will vote on the contract, IAM International President Tom Buffenbarger (pictured) says Boeing added more than $1 billion to the previous offer in guarantees and other benefits. "I believe this represents a “significant” improvement worthy of the membership’s consideration. The total value of the Company’s current proposal is nearly $5 billion as of today’s calculations," he wrote.

Buffenbarger said he is "duty-bound to inform the membership this vote will be the final vote on this proposed contract. Since the previous vote taken on November 13, 2013, the Boeing Company sought Requests for Proposals (RFPs) from several other potential sites to locate the 777X program. Some may believe this is a “fake” play by the Company.

"Your union, based upon information that indicates otherwise, must take the threat seriously. Given the legalities of the RFP process and the fact that several states have tendered serious offers and incentive packages to the Company, the timeline for the Puget Sound area is expiring."

But the District 751 leadership team sent a letter urging that the contract be rejected, saying "You need to look at the facts of the economic destruction you would have to live under for the next 11 years, without any opportunity to change any provisions of the contract."

Among the points raised by the local union are:

• There’s no clear statement of work, and the language in the Boeing proposal clearly states that the company reserves the right to subcontract or outsource “certain 777X work packages in whole or part.”
• Boeing leaders have told us they do not intend to use any of our current wing line mechanics to do 777X wing work, which will directly affect all of you who build wings.
• Boeing’s proposals on pay and benefits will mean decreases in your take home pay. Your monthly health care premiums will go up at least 10 percent each year, while you’ll see guaranteed wage increases (GWI) averaging only 0.5 percent from 2016 to 2024. (Specifically the proposal calls for 1 percent raises in 2016, 2018, 2020 and 2023.)
• For a Machinist earning $30 an hour today, that average 0.5 percent GWI will amount to 15 cents an hour or roughly $300 a year. Our average wage today is $29 an hour.
• The company’s proposal also lets it lower future health care benefits without negotiations so that Boeing can avoid any potential excise taxes under the Affordable Care Act - or “Obamacare.”

The online news site MYNorthwest.com indicates that one of the major differences is Boeing's plan to scrap the Union's "defined benefits" pension plan for a 401(k) style retirement plan. Older workers say that's a non-starter, but younger machinists are more likely to accept that change. Aviation analyst Scott Hamilton told the website that he's never seen such infighting between local and national leaders and factions within the local union in his 30 years covering Boeing. He said the most likely winner in that scenario is Boeing.

In the balance is where Boeing will build the 777X, a decision the planemaker plans to announce early in 2014. If the union rejects the contract and Boeing moves production of the new widebody airplane out of the Puget Sound region, many in the industry say it is likely to lead to the eventual end of Boeing's presence in Washington state.

 The Associated Press reports that Boeing Executive Ray Conner told elected officials in the Puget Sound region that if the Union accepts the contract, it would guarantee that work on the 777X wing structures would stay in the Pacific Northwest. But by the same token, he said that rejecting the contract assures that the work will be done elsewhere.

Boeing spokesman Doug Alder said that the Union vote on Friday would be the last opportunity for them to vote before Boeing makes a final decision on where it will build the airplane.

While much of the focus is on the wing assemblies, political leaders in Washington said in a news conference that Boeing has not addressed where the fuselage will be built, or where final assembly will take place. But, they said, the wing is critical, and if the wing is not built in Everett, it is likely that future airplane production would go where the wings are being fabricated. Boeing would build a 1.2 million square foot facility on its current campus for the wing fabrication if the union approves the contract on Friday.

FMI: www.goiam.org, www.iam751.org, www.boeing.com