MIAMI — The ongoing saga of where the 777X will be built took a worrisome turn Thursday night as IAM District 751 President Tom Wroblewski tore up the contract during a union meeting, called it a “piece of crap”, and then said he would try to have the contract withdrawn altogether . It is not yet clear if Wroblewski will be able to withdraw the contract, thus cancelling a vote currently scheduled for November 13th(the vote stays on otherwise). What is clear is that Boeing and the unions (or at least union leadership), who until last night were on the same side, are now on a collision course that holds thousands of Puget Sound jobs in the balance.
Boeing responded strongly late last night, stating that “We chose to engage in Puget Sound first, but without full acceptance by the union and legislature, we will be left with no choice but to open up the process competitively and pursue other options for locating 777X work. If this is not ratified per the scheduled union vote on November 13th, we will begin taking the next steps.” With union leadership reversing course and several openly encouraging ‘no’ votes—never mind the rank and file who so far appear to be quite opposed—a ratification of the contract looks increasingly unlikely.
Before I get into some commentary on the whole situation, a brief aside about the legislative incentives package: Turns out that there is no language in the contract that ties the legislative package to Boeing keeping the 777X in WA…it’s a union ratification or its nothing. That revelation has prompted lawmakers on both sides of the aisle to wonder why they’re at the table at all. Others, seeing slightly more value in making Boeing happy, point out that a special session isn’t going to cut it time-wise to debate and pass a number of the issues on the table. Particularly contentious are the ten cent gas tax and transportation package, especially with budget minded Republican members.
As for my thoughts, people seem genuinely surprised that the union is bucking Boeing and seriously considering calling management’s bluff. I don’t understand why this is surprising. Yes, I know the future of Boeing in Puget Sound potentially rests on this vote (if it even happens). But many union members, right or wrong, are convinced that without them Boeing would wither up and die tomorrow. The threat to go elsewhere was largely seen as hollow from day one, the deep cuts to personal benefits just adding insult to injury. People don’t like it when they feel a gun is to their head, and when you’ve got a group of people who feel they’re the ones who should be holding the gun – well, this is what happens.
Yes, it’s true that Boeing would have a hard time getting a new plant up and running elsewhere. Locations in Long Beach, CA (home of the soon to be decommissioned C-17 plant), and Texas are in the cards I hear, but both seem unlikely. That leaves Charleston as the obvious alternate final assembly choice: the company has ample space through recent land acquisitions, a growing knowledge base, and most importantly, far more favorable labor conditions. While Charleston (CHS) has struggled to get up to speed on the current 787 line, it will eventually get there. And with the 777X expected to be in production well into the middle of the century, Boeing is probably thinking more about what CHS would look like in 2025 or 2035, rather than 2016.
As for the wing assembly plant? That could be given away to any one of a number of Boeing facilities. Or it could be given to current manufacturers in Japan, which certainly wouldn’t hurt.
Yes, it’s true that we’ve been here before. The 787 program went down the same way, facing similar hurdles. Some folks contend that Boeing fully intends to build the 777X in Washington State. The negotiation battle, and in particular the legislative package, just underscores that the company is out to wring as many budget-saving concessions out of the state and their employees as they can get away with – just like they contend happened with the Dreamliner.
That may be true, but things are different this time. To contend that Boeing will eventually cave and build the plane in Seattle overlooks that Charleston actually exists now. It’s not a theoretical threat like it was last time – it’s a real one with real soil and a real factory making real airplanes (albeit very slowly). Boeing obviously wants to make the airplane in Seattle, but they certainly don’t have to anymore: Every year that CHS keeps running, Boeing’s threat to ship out of Seattle has become less and less hollow.
At best, Boeing could go back to the table and negotiate within the tiny amount of wiggle room that has been publicly left. At worst, the two parties will wind up colliding in an epic battle: no matter how you cut it, the result won’t be pretty. With the formal launch of the 777X program expected at the Dubai Airshow in two weeks things are poised to get a lot more interesting. Boeing is rumored to be expecting up to $80 billion in orders during the show for the jet, wherever it winds up being built.