Despite threats, Boeing workers reject company’s concession demands

At Boeing business isn’t just good, it’s great.

“Consistently strong operating performance is driving higher earnings, revenue, and cash flow as we deliver on our record backlog and return increased value to  shareholders,” said Boeing CEO Jim McNerney in the company’s third quarter  earnings release.

So far this year, Boeing has reported $62.8 billion in revenue, up 6 percent over the same time period in 2012 and net earnings of $3.4 billion, up from $2.9 billion for the same period in 2012.

It also has $15.9 billion in cash and marketable investments on hand while owing $9.6 billion in debt.

The future is even rosier. It has a backlog of orders worth $415 billion.

The crown jewel of this highly profitable enterprise is its commercial airlines division, which reported $38.3 billion in revenue for the first nine months of 2013 and has backlog of “nearly 4,800 (airplanes) valued at a record $345 billion.”

But Boeing is reluctant to share this bounty with its production workers at its commercial airlines operations in the Puget Sound area of the State of Washington and, in fact, has been trying to wrest concessions from them.

To do so, the company offered members of IAM District 751 a long-term contract guaranteeing that Boeing’s new  777X would be built in the Puget Sound at least through 2024, essentially guaranteeing jobs for the next 11 years.

To sweeten the deal, Boeing also offered the workers a $10,000 signing bonus if they ratified the contract by November 13.

In return, Boeing demanded a phasing out of the workers’ defined benefits pension plan, substantially higher out-of-pocket expenses for health care coverage, and a two-tiered wage system.

The offer would have extended the current contract which expires in 2016 to 2024.

District 751 members rejected the offer by a two to one vote.

“I couldn’t be more proud of my brothers and sisters,” said Robley Evans, a forklift driver at Boeing’s Auburn plant, to the Seattle Times. “We stood against the wall.   We won. We saved our union tonight. That contract would have destroyed our union.”

Had that contract been approved, workers would have stopped accumulating pension benefits in 2016, the company would have stopped making pension contributions, and, instead of a defined benefit pension, the workers would have over time been converted to defined contribution retirement savings plan.

Workers’ health care premiums would have been raised to $40 a month with a 10 percent increase each year until 2025. Co-pay and co-insurance costs would also increase, and the company reserved the right to increase worker costs even more in 2018 to avoid paying an Affordable Care Act excise tax.

New hires would not be eligible for regular pay progressions that would bring them to the maximum pay rate in their job category in six years. Instead, they would receive $0.50 per hour raises at six month intervals.

New hires would also not be eligible for the disability retirement benefit; instead, if they were to become disabled, the company would pay only a one-time lump sum of $15,000.

There was a lot of pressure on the workers to accept the concessions.

Boeing made it known that the company was scouting for alternative locations to produce the 777X and threatened to relocated the 777X production line unless the workers voted yes.

State leaders were also hoping for a yes vote. The state legislature and Gov. Jay Inslee approved tax incentives worth $8.7 billion to comply with a demand Boeing made in return for building the 777X production line in Washington.

The official position of District 751’s leadership was neutral, but the fact sheet about the proposal published on the union’s website emphasized the positives of the company proposal–long-term job security, the $10,000 signing bonus, etc. –and downplayed the negatives.

For example, in describing the health care cost increases, the fact sheet stated that, “Overall health insurance costs for employees under the company’s proposal will be below the national average, especially for employees with family plans, including prescription drugs.”

Despite the pressure, workers voted to reject the company’s concession demands and remained defiant despite the consequences.

“It’s a very real possibility that the company could act suicidal again … and move out of state, which doesn’t make any sense financially,” said Dan Swank, a 17-year Boeing workers on the Everett flight line to the Seattle Times. Boeing CEO Jim McNerney “hates unions so much, that could happen. We’ll fight those battles as they come.”


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