Boeing 777X to be built in Seattle area after union vote

This rendering by the Boeing Co. shows how the 777X is expected to look when the plane begins production.

This rendering by the Boeing Co. shows how the 777X is expected to look when the plane begins production.

By Liz Segrist
lsegrist@scbiznews.com
Published Jan. 4, 2014 at 2:14 a.m.

Machinists union members approved the Boeing Co.’s latest labor contract for the 777X by 51% early this morning, securing thousands of aerospace jobs and billions in investment for the Puget Sound area.

“It was not an easy vote for any of us,” International Association of Machinists and Aerospace Workers’ spokesperson Jim Bearden said in a KIRO 7 live stream from Washington state.

The vote means the 777X final assembly and wing fabrication and assembly will be in the Puget Sound, and extends the IAM’s contract for eight years through 2024. Production of the company’s next-generation jetliner will bring roughly 8,500 jobs and a $10 billion investment to the region.

The vote also ends nearly two months of states competing for the 777X work amid union leaders and Boeing executives fighting over labor terms in the contract that gives employees a $15,000 bonus, but changes their pension plans to contribution plans.

“There’s been a lot of frustration and tension over the last few months,” Bearden said. “We must unite for our future. It’s up to all of us to pull together to make this airplane program successful.”

The International Association of Machinists and Aerospace Workers’ President R. Thomas Buffenbarger ordered the Jan. 3 vote over objections of the local IAM District 751’s leadership, who urged members to reject Boeing’s offer.

“All along we knew that our members wanted to build the 777X, and that it was in Boeing’s best interest to have them do it,” IAM 751's President Tom Wroblewski said in a statement.  “We recommended that our members reject the offer because we felt that the cost was too high, in terms of our lost pensions and the thousands of dollars in additional health care costs we’ll have to pay each year.”

Roughly 31,000 union members in Washington, Oregon and Wichita, Kan., were eligible to vote from 5 a.m. to 6 p.m. Pacific Standard Time (9 p.m. Eastern Standard Time).

The 777X will be built in the Puget Sound area by Boeing employees represented by the IAM, Boeing South Carolina spokeswoman Candy Eslinger said in an emailed statement.

This work includes fuselage build, final assembly and major components fabrication such as interiors and wires, as well as the composite wing fabrication and assembly, she said. There is no other composite wing production facility in the U.S. today.

“Current mechanics will have the opportunity to be trained for this new composite work, which could set the stage for the next generation of manufacturing innovation in the Puget Sound region,” Eslinger said.

In addition, Boeing commits to fabricate and assemble the 737 MAX in the Puget Sound and KC-46 Tanker and P-8 production work in Puget Sound and Portland through 2024, Eslinger said.

“The impact of this agreement extends far beyond IAM members who voted today,” Buffenbarger said in a statement. “For decades to come, the entire region will benefit from the economic activity and technological innovations that will accompany the production of the 777X and 737 MAX.”

Boeing opened up the competitive bid process for the 777X in November after the Machinists union voted down Boeing’s initial labor agreement by a two-to-one margin.

Boeing received 54 site proposals from 22 states last month. The list of states was not released though some states announced their intent to bid for the work. The S.C. Commerce Department declined to comment on whether South Carolina submitted a proposal, but aerospace analysts and officials from other states assumed the state was in contention.

Several states passed tax incentives for the aerospace giant. Washington state legislators approved $8.7 billion in tax breaks for Boeing.

Washington Gov. Jay Inslee expressed his excitement that the Machinists union voted to approve the 777X labor contract and that the “long, hard road” is behind the state.

“It is not a surprise and should not be that this was a very difficult decision for machinists and their families,” Inslee said.

Following that initial union vote, Boeing executives and union leaders met last month to discuss possible changes to the contract. Boeing wanted local union leadership to advocate for the contract, which they declined to do. Union leaders turned down the contract and said it wasn’t different enough to bring it up for a vote. That changed when IAM International called for today’s vote.

The Boeing contract includes a $15,000 signing bonus for union members and additional dental benefits. It also maintains the way employees accelerate to the top of the pay scale, which was a major sticking point in November, but it will slow progress of future hires.

The contract changes the union’s retirement plan. Employees can keep their pension accruals until November 2016. At that time, they will move to a defined contribution plan that’s more like a 401(k), with retirement contributions from the company. The pension plans changes had been a deal-breaker for many union members.

Long Beach, Calif., St. Louis, Huntsville, Ala., and North Charleston were thought to be viable options for the work as well.

“Thanks to this vote by our employees, the future of Boeing in the Puget Sound region has never looked brighter,” said Boeing Commercial Airplanes President and CEO Ray Conner 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.”

Analysts estimate the 777X and 737 MAX programs could account for as many as 20,000 direct and indirect jobs and billions in economic activity.

“The 777X is not just Boeing’s newest wide-body aircraft,” Buffenbarger said. “In materials, technology and manufacturing skills required, the 777X represents a quantum leap in aviation history. IAM members have built Boeing aircraft in Puget Sound for more than 60 years. This agreement assures they’ll continue building them for decades to come.”

Reach Liz Segrist at 843-849-3119 or on Twitter @lizsegrist.

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