The Machinists leadership agreed on Tuesday to take to its members a Boeing proposal that takes away some cherished union benefits but ensures local workers will fabricate the forthcoming 777X’s giant wings and assemble the plane in the Seattle area.
The agreement means members of the International Association of Machinists will vote next week on a new eight-year contract with big cuts in future pension and health care benefits.
Union members will earn a $10,000 signing bonus, if it passes, payable within a month.
The pension change is a major loss for current employees: Traditional pension accruals will stop, to be replaced by an alternative company-funded retirement savings plan.
Clearly those terms were tough for the Machinists leaders to accept.
“Only a project as significant as the 777X and the jobs it will bring to this region warrants consideration of the terms contained in Boeing’s proposal,” District 751 leader Tom Wroblewski said.
If passed, the proposed deal’s eight-year span from the end of the current contract in 2016 ensures Boeing management a full decade of labor peace.
“Securing the Boeing 777X for the Puget Sound means much more than job security for thousands of IAM members,” Wroblewski said. “It means decades of economic activity for the region.”
To try to secure a “yes” vote by the union’s members, Boeing’s package includes substantial cash awards: not only the big ratification bonus but also a generous buyout plan for workers over 58 who are contemplating retirement.
The outline of what’s under consideration suggests a major poker play by the company to cut its long-term costs, using the future of airplane manufacturing in the Puget Sound area as the high stakes on the table.
The 777X is a proposed new variant of today’s 777 that will retain the same metal fuselage but add new engines and new carbon-fiber-reinforced plastic composite wings.
The plane is expected to be launched at this month’s Dubai Air Show and to enter service around 2020.
Almost 20,000 Boeing employees work directly or indirectly on the 777 program today.
One machinist summed up Boeing’s strategy this way: Offer the big signing bonus to entice younger members who perhaps aren’t thinking of staying their entire working lives with the company. And use the early retirement package to swing the votes of those planning to retire in the next few years.
For everyone else, this machinist said, the offer is “a losing deal.”
However, another machinist said the agreement is the best available. He said major layoffs lie ahead because the 787 program was over-staffed as Boeing worked to fix issues now largely behind it.
Among the union rank-and-file there is a widespread conviction that Boeing has presented its offer on a “take-it-or-leave-it” basis.
One union official told members that if the offer is voted down, Boeing the next day will put the 777X work out to bid by other states.
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