Boeing settles labor case; new 737 going to Renton

Nov 30, 2011

Everett Herald

By Michelle Dunlop, Herald writer

November 30, 2011

A potential union strike averted. Production work on Boeing's 737 MAX secured. An ugly labor lawsuit likely resolved.

Any one of those alone would be considered a huge feat.

But the Boeing Co. and the Machinists union tentatively accomplished all three with a landmark agreement announced Wednesday. The deal hinges on a Dec. 7 vote by Boeing Machinists.

"We have secured jobs for our members; we have secured jobs for the state of Washington and for this community," said Tom Wroblewski, local union president.

Under the agreement, Boeing will build its re-engined 737 MAX jet in Renton, where the existing single-aisle aircraft has been assembled for decades. It will also help make Boeing's troubles with the National Labor Relations Board disappear. And the two are expected to sign a four-year contract extension that eliminates the possibility of a labor strike until late 2016.

The deal is the result of secret talks that began in late October between Boeing and union leaders. The existing labor contract isn't set to expire until autumn. And Boeing hadn't been expected to announce a production location for its 737 MAX until in the first three months of 2012.

The labor board recently asked a federal judge to compel Boeing to release sensitive, and likely embarrassing, documents in a case in which Boeing is accused of illegally retaliating against the Machinists by locating a second 787 production line in South Carolina. However, the case was expected to take years to resolve in the court system.

Boeing spokesman Tim Healy called the new contract with the union "a starting point of a new relationship with the IAM."

Political leaders and industry analysts welcomed the news. Rep. Rick Larsen, D-Wash., applauded the two sides for ensuring thousands of aerospace jobs in the state for decades to come.

"This is momentous news for all of Washington, and is further evidence that our aerospace workers are the best in the world," he said.

Analyst Scott Hamilton with Issaquah-based Leeham Co. said the deal provides stable work for the next decade. "There is no loser here, except maybe the other states that were salivating over the MAX," Hamilton said.

The union already was circulating the details of the new four-year contract to members, saying they should accept it. They said job security was the No. 1 concern they heard from members in response to a survey about the next contract.

The agreement provides union members with the following:

•A $5,000 ratification bonus.

Future 737 MAX work in Renton.

General wage increases of 2 percent annually.

Incentive pay of 2 percent to 4 percent of salary.

Preservation of retiree medical benefits for existing and future workers.

A cap for out-of-pocket health care expenses, although members will be required to pay more.

The union represents more than 29,000 members in the Puget Sound region.

Also voting on the contract will be about 1,200 Machinists in Portland, Ore., and 400 in Wichita, Kan. Boeing recently said it is considering shuttering its Wichita defense site because of a downturn in U.S. defense spending. If it does, the company's work completing refueling tankers for the U.S. Air Force would move to the Puget Sound region as part of the new contract.

Nikolas Decaro, 26, who stopped by the union hall before starting his shift as a painter, said his Boeing friends on Facebook were talking about the proposed contract.

"It sounds like it's a good contract," Decaro said. "I think a lot of the younger crowd will bite onto (the $5,000 signing bonus)."

No contract is ever perfect but this one contains more pluses than minuses, said Edmonds resident Chris Louye, a program coordinator for Boeing and the Machinists' Joint Programs. The contract also shows Boeing and the union can work together, said Louye, 61.

"We need to build airplanes, not worry about strikes," he said. "I congratulate our union leadership and the company leadership for doing something early. This is a great thing."

Gov. Chris Gregoire learned of the deal in phone calls from company and union officials Wednesday morning. Although Gregoire said she "could not be happier," she also urged that lawmakers follow through with her plan to land the 737 MAX by spending $10 million for expanded aerospace training and education. Her proposal also includes enrolling more engineering students at the University of Washington and Washington State University.

"Let us not fall asleep here. Let us wake up tomorrow morning and remember that with international competition we've got to fight for it every single day," she said.

In 2009, the state lost out on the second 787 assembly line to South Carolina. That move has been the source of the labor board's case against Boeing. If the Machinists approve the new contract, then union leaders will meet with the labor board attorneys and tell them "that we believe all of the grievances with the Boeing Co. will be settled," Wroblewski said. The Machinists will ask that the NLRB's case against Boeing be dropped.

Lafe Solomon, general counsel for the labor board, called the agreement between the two sides a "very significant and hopeful development."

Gary Chaison, professor of industrial relations at Clark University, said the union seems to have used the South Carolina dispute as leverage to guarantee other unionized jobs in the Seattle area, but on a different plane.

"I think the NLRB will be very happy to get this case off the table," Chaison said. "This was probably the most controversial thing the NLRB has done in two or three decades."