Boeing and its largest union have reached a landmark agreement that ensures Boeing will build its new 737 Max in Renton, could avoid a costly strike next year and could end a contentious dispute over a new plant in South Carolina.
But, perhaps even more importantly, the apparent ease and speed with which Boeing and the Machinists Union reached an accord could signal a softening of a contentious and difficult relationship that stretches back more than 60 years.
“We look forward to a new era of prosperity for The Boeing Company and the union and the state of Washington, Kansas and Oregon,” said Mark Blondin, the International Association of Machinists aerospace coordinator.
The agreement, which must be approved by the Machinists Union rank and file in a vote set for Dec. 7, was the result of secret talks initiated by Boeing high executives with union negotiators in late October.
The tentative pact extends the current labor agreement by four years if ratified.
It also would ensure that 737 production would continue at Renton for at least two decades more. Boeing’s Renton plant already holds the record as the world’s longest-lived commercial aircraft factory. The plant was built during World War II to build bombers, but was converted to airliner production after the war. Renton has produced Boeing’s 707, 720, 727, 737 and 757 aircraft as well as the Navy’s new P-8A maritime surveillance aircraft.
Boeing said it too was pleased with the tentative deal.
“The 737 MAX builds upon the legacy of the world’s best single-aisle airplane and continues to generate overwhelming response from our customers,” said Jim Albaugh, president and chief executive officer of Boeing Commercial Airplanes. “If our employees ratify a new agreement, building the 737 MAX in Renton will secure a long and prosperous future there, as well as at other sites in the Puget Sound area and in Portland, Oregon, where 737 parts are built.”
Wall Street gave the new agreement good marks. Boeing stock closed up 5.2 percent Wednesday at $68.69 a share.
The proposal includes job security for union members ensuring that not only will the 737 MAX be assembled in Renton but that parts and subassemblies for the plane will be manufactured in other union-staffed plants in the Puget Sound area and Oregon.
Pierce County Executive Pat McCarthy, in a news release, praised Wednesday’s developments. “This is great news that will have a positive effect on Pierce County’s economy. The Boeing plant in Frederickson builds parts for the 737, and Pierce County is home to nearly 100 Boeing suppliers. In addition, thousands of people who work at the Renton and Frederickson plants live in Pierce County.”
That language on job security is “precedent-setting,” said Tom Wroblewski, president of Machinists Union District Local 751.
Union members were receiving details of the proposed agreement this week. The proposal includes a $5,000 ratification bonus, wage increases that could exceed 6 percent a year as well as higher pension benefits (up to $91 per month per year of service by the contract’s end) and a continuation of retiree medical benefits and cost-of-living adjustments.
Absent from the final results were Boeing takebacks of union benefits or work rules. In prior negotiations in recent years, the company had made strong efforts to change the form of the pension plan, to cut back on retiree benefits or make major amendments to the medical plan.
The union told members the secret talks were conducted without public notice to keep the negotiators from being distracted by outside issues.
“What has resulted is an unprecedented commitment by Boeing to Puget Sound and Portland for the 737MAX and the related manufacturing that’s currently being performed here. This will generate long-lasting security for our members. It also resulted in a Boeing commitment to the success and continuation of the other airplane programs where our members have shown time and again their expertise, productivity and quality, resulting in increased profits for the company,” the union said in a message to its membership.
Union negotiators are recommending members approve the agreement.
“Based on many factors – the current economy, the state of affairs at Boeing and our ability to secure unprecedented job security for our members – we unanimously recommend you vote to accept this proposed contract extension,” the union told its members.
If the agreement is ratified, the union will ask the National Labor Relations Board to drop its lawsuit against Boeing over the company’s decision to locate a second 787 Dreamliner assembly line in South Carolina.
The NLRB had taken Boeing to task accusing the company of retaliating against the union by picking South Carolina over Everett for the second Dreamliner assembly line.
When Boeing picked South Carolina over Everett for the second 787 assembly line, the company said its inability to reach a long-term labor pact with its unions was key to its decision to open its first assembly line outside the Puget Sound area.
The Machinists Union had struck the company for several weeks after discussions in 2008 failed to reach an agreement. The pact that resulted from the strike and subsequent talks was due to expire next fall.
Wednesday’s announcement came as a surprise to members of a high-level coalition of government and civic leaders who were working to keep the 737 plant in Washington.
Bruce Kendall, chief executive of the Economic Development Board for Tacoma-Pierce County and a member of the coalition, said the announcement came as a pleasant surprise to him.
“This was a negotiation that we were not informed about,” he said.
“Clearly some sober minds got together and looked reality in the face and came up with a solution good for Boeing, good for its workers and good for Washington,” Kendall said.
Washington Gov. Chris Gregoire was happy to hear of the agreement.
“I commend both Boeing management and the Machinists for coming to the table, negotiating in good faith and working together to reach an agreement,” she said in a prepared statement.
Gregoire said despite Boeing’s decision in Renton’s favor, she still intends to press the Legislature to pass an action plan to improve the state’s aerospace work force.
In addition to guaranteeing that the 737 would continue being built in Renton, the company also agreed to keep wide-body jet manufacturing in Everett, to continue building the P-8A surveillance aircraft in Puget Sound and to assemble the Air Force’s new aerial tanker in this state. Under existing plans, the basic tanker aircraft would be built in Everett and then flown to Boeing’s Wichita plant for outfitting as a tanker. Boeing is considering whether to close the Wichita plant because of diminishing defense work. If Boeing shuttered that plant, the work it would have done on the tanker, would be moved to Puget Sound.
The Boeing 737 MAX is the newest version of the best-selling single-aisle plane. It is scheduled to enter service in 2017. The plane will have more fuel efficient engines, aerodynamic enhancements and an upgraded interior. Boeing says its has airline commitments for 700 of the planes so far.
John Gillie: 253-597-8663 firstname.lastname@example.org