MIAMI — Boeing has reached an agreement with the machinists unions that could ensure that the first Boeing 777X airplanes will be built exclusively in Washington State.

(Credits: Boeing)
(Credits: Boeing)

The tentative agreement will see that final assembly of the new airplane takes place in Boeing’s Everett, WA plant. In addition the plan will also see production of the airplane’s carbon fiber wings in the Puget Sound region. A Boeing spokesperson confirmed that both production lines would be exclusive to the area, noting that will “not be a mirror image in another location.” The projects exclusivity would stabilize aerospace in Washington State for decades to come.

In exchange, Boeing is requesting hefty concessions from its workers. The new contract would include a termination of pension accruals for current employees, and the creation of a new company funded retirement plan whose details are yet to be made clear. The Seattle Times additionally reports that health-care benefits will be cut, but also does not provide details.
New hires will also face a longer wage increase battle, as it will now take sixteen years to reach the top of the pay scale instead of the current six.

To attempt to pacify workers, the plan also includes a ratification bonus of $10,000 per employee and a golden-handshake buyout for those nearing retirement. If ratified by the union rank and file, who are expected to vote on the matter mid-next week, the amended contract will be extended through 2024. For Boeing employees not aiming to stay much longer, be they younger folks with plans to move elsewhere or near-retirees with plans to move on the deal is not half bad. But for everyone else the offer amounts to a dose of awfully bitter medicine.

Future of Flight/Everett Factory doors. (Credits: Boeing)
Future of Flight/Everett Factory doors. (Credits: Boeing)

Keen to keep a project that is expected to generate tens of thousands of jobs over the coming decades, Washington state lawmakers were asked today by Washington Governor Jay Inslee to approve a package of incentives in a special joint session set to start tomorrow. The package includes transportation and education investments, streamlined regulations, and extension of commercial airplane tax breaks through 2040. The tax breaks include reduced B&O taxes, sales & use tax exemptions, and breaks for property and building projects. The entire package is listed at over $8 million. The session is expected to begin on Thursday

Boeing, according to Inslee, has said that they will build the airplane in the region if the incentive package is approved by lawmakers and if the union contract is ratified. But securing both could be tall orders. Boeing rank and file employees will likely have a tough time stomaching the cuts to personal benefits, though short of striking it is not clear what options they have. The fact that union leadership swallowed them suggests Boeing brass currently maintains the upper hand.

Negotiations between Boeing and the International Association of Machinists and Aerospace Workers (IAM) had been in the works for months, though formal negotiations began only last week.

The prospective deal comes as the Seattle region has fought to keep the latest Boeing airplane at the Everett plant. Both the new Charleston, South Carolina plant and the soon to be emptied Long Beach, CA plant were under consideration. Unconfirmed reports had been flying around that Charleston plant was gaining steam to get the nod. Just last week Boeing rattled nerves and buoyed hopes at sites across the country as they announced that much of the groundwork for the 777X engineering would be done outside of Seattle. Despite caution from both Boeing and unions that the decision was not the final word on final production, many in Washington State heard death bells ringing under the cloudy skies. The move was seen by analysts as both strategic and practical: Boeing was able to demonstrate the feasibility of alternative sites while also providing work at sites whose defense contracts have expired, such as Long Beach.

By confirming that the production lines would be exclusive to Washington Boeing has agreed to write off their new Charleston, South Carolina plant for one of the biggest projects the company will undertake this century. Doing so guarantees that the company will not later move or duplicate production elsewhere, as Boeing did in the creation of the South Carolina facility with the 787.

The program is expected to generate work for the region well into the middle of the century as the already popular 777X goes up for sale in the coming weeks. Boeing’s Everett plant, home to every widebody program the company has produced, wound wind up busy for years to come.

777 Everett Factory. (Credits: Boeing)
777 Everett Factory. (Credits: Boeing)

Yet the addition of the carbon-fiber wing manufacturing plant would be an equally–if not more–important long-term win for the region as well. At present, Puget Sound manufacturing is one generation behind the latest and greatest in aircraft wing manufacturing. The most modern wing produced by the company, for its composite 787 aircraft, is currently manufactured abroad. Should all parties involved fail to seal the deal for Washington State the region would wind up two generations behind the latest technology, setting up a knowledge gap that may be unrecoverable down the road.

As union members anticipate receiving full details of the proposal tomorrow and lawmakers in Olympia prepare to debate the incentives package, the future of Washington state aerospace hangs in the balance.