Boeing and its largest union have reached a landmark agreement that ensures Boeing will continue building its popular 737 in Renton, could avoid a costly strike next year and could end a contentious dispute over a new plant in South Carolina.
The agreement, which must be approved by the Machinists Union rank and file, 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.
“We look forward to a new era of prosperity for the Boeing and the union and the state of Washington, and Oregon,” said Mark Blondin, the International Association of Machinists aerospace coordinator.
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, 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, Ore., where 737 parts are built.”
The proposal includes job security for union members ensuring not only will the 737 MAX be assembled in Renton but that parts and subassemblies for the plant will be manufactured in other union-staffed plants in the Puget Sound area and Oregon.
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 today. They will vote on the ratification question next week. The proposal includes wage increases, but also higher health insurance costs for union workers.
The union told members the secret talks were conducted without public notice to keep the issues focused. Those discussions were fruitful, the union said.
“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 inform the National Labor Relations Board that its disagreements with Boeing over location of a second 787 Dreamliner assembly line in South Carolina are resolved.
The NLRB had taken Boeing to task accusing the company of retaliating against the union for prior disagreements with Boeing by picking South Carolina over Everett for the second Dreamliner assembly line.
Today’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 high-level 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. This tentative deal recognizes the talent of Boeing’s highly trained workforce, while providing the company the confidence it needs to assure its customers that planes will be delivered on schedule. And as this sector becomes increasingly competitive, this initial agreement shows a strong commitment by both sides to secure the future of aerospace in Washington state,” 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 aerospace education enhancements a study had recommended that Washington fund to improve the workforce here.
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.
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.