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IAM leaders reject Boeing's 'best and final' 777X offer

Company gave some ground but still sought previously proposed pension changes

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By Dan Catchpole
Herald Writer
@dcatchpole
Published:
Aerospace industry boosters in Washington had hoped for an early Christmas present when news broke earlier this week that the Machinists union and the Boeing Co. were back at the bargaining table. But after three days, talks ended Thursday after union leadership rejected what the company described as a "best and final counter-proposal."
"The price Boeing demanded was too high," said District 751 President Tom Wroblewski of the International Association of Machinists and Aerospace Workers (IAM). "Our senior leadership team could not recommend Boeing's counter-offer."
Among other problems with the Boeing offer, it was contingent on union leadership recommending that members vote to approve it, Wroblewski said in a statement posted on the union's website. "This we could not do. Our members had already rejected this."
District 751 represents some 32,000 machinists at Renton-based Boeing Commercial Airplanes. In Everett, Renton and other locations, they build all of the company's commercial jetliner models. In the absence of a revised contract, Boeing might build the planned new 777X somewhere besides Washington. It already builds some 787s in North Charleston, S.C. Twenty-two states have submitted proposals containing incentives and other benefits, hoping to land a Boeing factory, the company said Thursday.
On Wednesday, the union said it had proposed a contract intended to "meet the needs of our members while also ensuring the long-term success of the Boeing Co. in Washington state." Neither the union nor the company disclosed details.
The next news came late in the afternoon Thursday, when the company issued a statement saying that it had made a counter-proposal.
Like one proposed last month that was overwhelmingly rejected by union members, the counter-proposal was an eight-year extension of the present contract, which expires in 2016. And like the earlier offer, it would have sited final assembly of the company's new 777X in Everett and fabrication of the revamped airplane's carbon-fiber-composite wings in metro Puget Sound.
Unlike last month's offer, the new proposal would have meant signing bonuses totaling $15,000 instead of $10,000 and would have retained the present rate at which workers move up the pay scale. And Boeing would extend its promise to build the 737 MAX in Renton to 2024. The present contract guarantees MAX production in Renton until 2016.
But Boeing stuck by a proposed change from the earlier offer: Defined pension accrual would be ended and 401(k)-like retirement plans would be phased in.
The overall offer "was rejected by the union leadership," the company said in the statement.
Wroblewski and Boeing Commercial Airplanes CEO Ray Conner have been the top figures in talks that began Tuesday at the Boeing Commercial Airplanes headquarters in Renton.
"We entered these discussions to address the concerns we were hearing from our employees," Conner said in the company's statement. "We've listened to the union leadership and had an open dialogue in hopes of moving toward each other. Unfortunately the offer, which would have ensured this great airplane for the Puget Sound region, was immediately rejected by the union leadership."
For good reason, Wroblewski said. "Boeing’s counter-offer on Thursday was mostly unchanged from the proposal that Machinists had rejected by a 2-to-1 margin on Nov. 13, demanding steep concession in retirement and health benefits while limiting future pay increases," he said. "Machinists union pay and benefits make up less than 5 percent of the total cost of building an airplane. And for these pennies on the dollar, Boeing gets in return the most-skilled, most-productive aerospace workers in the world.
"Any objective analysis will show that Boeing’s best business case is to build the 777X in Washington, utilizing the skills, experience and dedication of our Machinists union members," Wroblewski said.
"Going back to the table was the responsible thing to do," he said. "We just couldn't get to an agreement. Again, the price was too high."
After last month's cotract was rejected, Boeing solicited proposals for incentives to site a factory for the 777X. Bids from states came in Tuesday.
"The 777X site selection process has continued in parallel with this week's IAM meetings," Boeing said in Thursday's statement. "In an overwhelmingly strong response from interested participants, Boeing has received proposals from 22 states, many of which submitted multiple sites for consideration. A total of 54 sites are now being evaluated in the next critical stage of the process."
Washington Gov. Jay Inslee issued a statement late Thursday, saying he would later talk to both sides.
"Despite today's setback, I remain convinced that an agreement between the Machinists and Boeing would be in the best interest of all parties -- the workers, the company and Washington state," the governor said. "We have submitted our state's proposal and I still hope that the company will recognize that the best way to ensure that the 777X is delivered to its customers on time and at the least cost is to build it here.
In recent weeks, Inslee, other public officials and aerospace industry insiders had worked to get the two sides to back to the bargaining table.
Dan Catchpole: 425-339-3454; dcatchpole@heraldnet.com.

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