Showdown in Seattle:
Boeing vs. Union
Thomas Lifson
The Washington State
Legislature takes Boeing's threats very seriously, indeed. Boeing has long
complained about the tax burden Washington State imposed on it, on the theory
that the company's dominance of the civil airliner business made it a golden
goose whose eggs belonged in the coffers of the state as much as they belonged to
the shareholders. But with the rise of Airbus Industrie, that dominance no
longer can be taken for granted, and Boeing caused deep shock when it opened
its plant in South Carolina. Over the weekend, the State Senate and then
the House passed a $9 billion tax
break:
The Washington State
Legislature overwhelmingly passed a measure on Saturday to extend nearly $9
billion in tax breaks for Boeing through
2040 in an embattled effort to entice the company to locate production of its
newest jet, the 777X, in the Seattle area. (snip)
The tax measure passed the Washington State
Senate by a vote of 42 to 2 on Saturday, with the State House later approving
it on a 75-to-11 vote.
Gov. Jay Inslee, a Democrat, said on Saturday
that he planned to sign the measure this week.
Signs are mixed as to how the union will
respond. Jonathan Kaminsky of Reuters
reports:
...at a raucous union
meeting Thursday night, IAM President Tom Wroblewski tore up the proposed
contract and called it "a piece of crap."
Hours later Boeing said it was ready to look for
another location.
Protest against the proposed contract continued
on Friday, as union members rallied in Boeing's Everett factory.
IAM members at District
751 and District W-24 will vote on November 13, 2013 on a proposal from the
Boeing Company that, if approved, would guarantee the Boeing 777X wings and
fuselage will be built by IAM members in the Puget Sound.
In exchange for the 777X guarantee, Boeing
proposes a new eight-year labor agreement that will expire in September 2024,
providing an unprecedented degree of labor stability in the volatile and
competitive industry.
"Securing the Boeing 777X for the Puget
Sound means much more than job security for thousands of IAM members,"
said District 751 Directing Business Representative Tom Wroblewski. "It
means decades of economic activity for the region and will anchor the next
generation of wide-body aircraft production right here in its historic
birthplace and will complement the 737MAX narrow body."
According to estimates, the 777X could mean as
many as 10,000 direct and 10,000 indirect jobs in the immediate vicinity, with
the project also serving as a long-term hub for advanced technology in
electronics, avionics and composite technology required by the 777X.
The proposal by Boeing includes additional
modifications to the current labor agreement, including cessation of pension
accruals for current employees and the establishment of an alternative
company-funded retirement plan. Additionally, within 30 days of ratification,
all members would be paid a $10,000 signing bonus.
"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," said Wroblewski. "While not all will
agree with the proposal's merits, we believe this is a debate and a decision
that ultimately belongs to the members themselves."
If the union rejects the contract and Boeing
moves the next generation assembly outside of Puget Sound, the union movement
in the United States will suffer a major blow. The plain fact is that Seattle,
buoyed by high tech and entrepreneurial ventures, has become a very expensive
area in which to operate a large blue collar assembly operation that faces
global competition. Beyond the back-and-forth of labor-management issues, the
underlying economics have changed. Boeing was founded and flourished in Seattle
because the original key raw material for airplanes was wood, and then later
aluminum, both of which are in abundance in the Pacific Northwest. But today,
composite materials are coming to the fore, and airplane assembly can be
located almost anywhere.
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