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Boeing machinists narrowly approve 777X contract (+video)

By a narrow margin, Boeing machinists voted to approve their contract with the company. Building Boeing's new 777X will stay in Washington State, but it means big changes in workers' retirement program.

By Staff writer / January 4, 2014

Boeing workers cry after learning that voters in District 751 of the machinists union voted to accept Boeing's latest contract offer to keep the assembly of the Boeing 777X airplane in Washington state, Friday, Jan. 3, 2014, in Seattle.

Ted S. Warren/AP

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Boeing machinists bowed to what may have been the inevitable Friday night, approving a contract that their local union had argued against.

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For many, the alternative appeared increasingly likely to be the loss of tens of thousands of well-paying jobs in the Puget Sound area as other states around the country lined up to offer better deals to the giant aircraft manufacturer. Boeing, which moved its corporate headquarters from Seattle to Chicago in 2001, already had shifted some of its 787 Dreamliner manufacturing line to South Carolina.

That the stakes were high and the vote would be close were givens.

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The contract is tied to years of work on Boeing’s new 777X airliner, to be built with composite wings and other advanced design and operational features.

But the deal agreed to by a majority of union machinists also includes major changes to the company’s retirement benefits as Boeing – like many corporations and organizations – shifts from defined pensions to employee-employer investment accounts.

Members of Local 751 of the International Association of Machinists and Aerospace Workers (IAM) had rejected a company offer in November.

But in a letter to union members last week, IAM international president R. Thomas Buffenbarger warned that “the timeline for the Puget Sound area is expiring,” and he noted that noted that “the total value of the new improvements to the contract offer adds more than $1 billion to the previous offer.”

“I believe this represents a ‘significant’ improvement worthy of the membership’s consideration,” Mr. Buffenbarger wrote. “The total value of the Company’s current proposal is nearly $5 billion as of today’s calculations.”

In the end, the vote was 51-49 percent in favor of the contract.

While it slows the growth of machinists' wages starting in 2016, workers would still get regular cost-of-living adjustments, plus an extra 1 percent pay increase every other year. By 2020, experienced mechanics and electricians would earn about $82,000, up from about $73,000 today. 

Boeing employees some 32,000 blue-collar workers in the Puget Sound region. When suppliers are added in, the number of aerospace jobs in Washington State totals about 132,000.

“Thanks to this vote by our employees, the future of Boeing in the Puget Sound region has never looked brighter,” Boeing Commercial Airplanes President and CEO Ray Conner said in a statement. “We’re proud to say that together, we’ll build the world’s next great airplane – the 777X and its new wing – right here. This will put our workforce on the cutting edge of composite technology, while sustaining thousands of local jobs for years to come.”

As reported by the Seattle Times, these are the major contract provisions:

• Extends current contract by eight years, through 2024

• Ends pension-plan accruals in 2016, substitutes a defined-contribution savings retirement plan. Instead of pension, Boeing contributes to a current employee’s retirement account 10 percent of gross pay the first and second years, 6 percent the next year, and 4 percent a year after that. New employees get 4 percent a year.

• Retains the current 401(k) plan (distinct from savings retirement plan), and increases company match to 6 percent of base pay, from 4 percent.

• Maintains the wage progression known as “zoom,” which moves new hires to top of their grade’s pay scale after six years.

• 4 percent general wage increase over eight years, plus cost of living.

• Provides $10,000 signing bonus now, another $5,000 bonus in 2020.

“I know well this decision wasn’t easy for any of the Machinists or their families, and I know that many of those men and women decided Boeing’s latest offer was still unacceptable,” US Sen. Patty Murray (D) of Washington said in a statement.

"The tough vote taken by the Machinists today means the 777X will be built in the only place it should be, by the only people prepared to deliver,” Sen. Murray said. “As so many Washington families know, this agreement is more than a business deal; it’s a guarantee that thousands of good-paying jobs and billions of dollars in economic growth will continue to strengthen our aerospace industry and our economy for years to come.”

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