Boeing Co. wants Christmas to come early as they wrap up the proposal process Tuesday for where their new-generation Boeing 777X family of jetliners will be built. But is the aerospace giant merely looking to stay cost competitive? Or are they actually out to bust the unions and get rid of pensions?
When the plane was launched last month, the company had in hand no less than $100 billion in orders from airlines in the Middle East. Great news for sure. Only thing is, Boeing still doesn’t know where it will build the jets. If you wanted your community to be considered, all you had to do is offer large tracts of property, billions of collars in tax breaks, sweetheart labor deals and customized employee training. More than a dozen states from coast to coast offered those incentives – and more.
Missouri’s legislature for example, convened to quickly whip up a package of incentives worth up to $1.7 billion to bid for the contract. Missouri Gov. Jay Nixon announced that the state’s major construction unions had agreed in an “unprecedented commitment” to a 24-hour, no-overtime work schedule if Boeing selects St. Louis to build the new factory.
Here is a short list of Boeing requires:
- “Site at no cost, or very low cost, to project.”
- “Facilities at no cost, or significantly reduced cost.”
- “Infrastructure improvements provided by the location.”
- “Highly skilled, yet low-wage workforce, at a location with a dedicated railroad spur and a seaport.”
- Low taxes.
You can read the whole list here.
Boeing says these things are essential in its heightened quest to compete financially with European rival Airbus. A couple of decades ago Boeing delivered nearly 300 planes more than Airbus. Last year that margin narrowed to just 13.
Boeing’s contract would have cut pension plans and healthcare benefits, but guaranteed jobs.
Boeing Commercial Airplanes Chief Executive Raymond L. Conner wrote a letter to members of the International Assn. of Machinists and Aerospace Workers District 751 before their vote last month on a contract that would have cut some pension plans and healthcare benefits, but guaranteed the 777X program would stay in the Pacific Northwest.
“What we want to avoid is that we become one of the companies that made decisions too late to remain competitive in the marketplace,” Conner wrote.
Before the vote, District 751 President Tom Wroblewski called Boeing’s contract proposal “a piece of crap” and 67% of the members voted to reject it.
“We preserved something sacred by rejecting the Boeing proposal. We’ve held on to our pensions and that’s big.”
“It is my belief that we represent the best aerospace workforce in the world and hope that as a result of this vote Boeing will not discard our skills when looking to place the 777X,” said Wroblewski in a statement following the vote. “We preserved something sacred by rejecting the Boeing proposal. We’ve held on to 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.”
In response to the vote, Boeing immediately went shopping for a potential new production home for the 777X and the thousands of jobs that go with it. They are presumably looking for a right-to-work state, where laws allow most workers to refuse to join unions even if their workplace is unionized.
There certainly is precedent for this at Boeing. After a bitter labor strike in 2008, the company sent much of the work on its 787 Dreamliner to South Carolina, a right-to-work state.
Under Boeing’s contract the union rejected, traditional pension plans for newly hired machinists would have been converted to a 401(k) type of retirement program.
Under Boeing’s contract the union rejected, traditional pension plans for newly hired machinists would have been converted to a 401(k) type of retirement program. Boeing proposed a contribution of 10% the first year, 8% the second, 6% the third and 4% for each year up to the end of the contract.
As this post in the Los Angeles Times points out, while it currently takes an aerospace worker six years to reach the top of a pay grade, the wait would have nearly tripled had the contract been accepted.
Shannon Ryker, a third-generation employee of Boeing, wrote an open letter to Boeing’s Ray Conner that was published in the Everett HeraldNet. Her grandfather began his career at the Boeing Company, her uncle and her father became lifers, her two brothers-in-law are also employed at Boeing, and on and on. She said she always believed Boeing had been good to her family, until this latest contract proposal she instead termed an “ultimatum.”
“I no longer can hold my head high and say I am proud to work at Boeing,” Ryker writes. “How can anyone be proud of something that attempts to extort and blackmail them? I would rather keep my integrity and be unemployed than bullied into agreeing to a contract that hurts my children in the future.”
Boeing won’t comment on how it plans to evaluate the bids, but the company says it plans to make a decision in the early part of 2014.