This will probably come as no surprise to those who watched the federal government stepping in to help unions strongarm manufacturers in the last few years, but Boeing is back in the news with more labor issues. The aerospace giant is getting ready to unveil their newest jet – the 777X – which had been widely expected to be built in the Seattle area as so many of their other lines have been. But at the last minute, the unions decided the deal wasn’t fat enough for their tastes.
Boeing workers’ rejection of a new labour deal has sent the U.S. planemaker in search of alternative sites to build its newest jet and could mark the beginning of the end for wide-body aircraft manufacturing in the Seattle area.
The vote by machinists late on Wednesday revealed strong opposition to the deal that Boeing said it needed to commit to building its 777X jet in Washington, with no indication whether fresh talks would take place.
The Seattle plant builds the current 777, but the 777X is seen as crucial to Boeing’s future as the successor to its most profitable long-haul aircraft. The 777X is expected to be launched at next week’s Dubai Airshow with the announcement of more than 100 orders.
Boeing Chief Executive Jim McNerney declined to say in a TV interview on Wednesday whether the vote was a take-it-or-leave-it deal. “There are options for us to look at and we will evaluate them and decide,” he told an NBC affiliate in Seattle.
The number of jobs and associated economic stimulus this project represents is staggering, but the machinists union was able to put the brakes on the entire deal. And what horrible treatment did they feel that Boeing was handing down to them this time?
The rejection surprised observers from Wall Street to Tokyo, where many had expected the union to back a plan that would have replaced their pension with a second savings-contribution plan and raised healthcare costs in exchange for Boeing locating the 777X factory in Washington state, sustaining an estimated 20,000 jobs for a generation.
In order to remain competitive, Boeing needed a restructuring – not elimination – of one portion of the union’s pension structure and some additional buy-in on health care costs. But that was clearly a bridge too far. And this came on the heels of a state-wide effort to give generous breaks and other options to the employer to keep the work in the local area, to the tune of $8.7 billion in tax incentives.
But apparently if you ask the unions to participate in the process and work with – rather than against – the people creating the jobs, that’s just outrageous and out of the question. It would be hard to blame Boeing at this point if they simply packed up and took their business to a state with a more reliable and less expensive work force. I bet Tennessee wouldn’t mind 20,000 new jobs. Any takers out there?