SEATTLE — The Machinists union rejected a revised contract proposal from Boeing on Wednesday, ending three days of negotiations over the future of the 777X program in Washington State. Union leadership had, on Tuesday, submitted a new proposal of their own to Boeing. Management responded to the offer with a counter proposal the following day, billing it as their final offer to keep the airplane in Puget Sound. Union leadership rejected it.
Reports from the Seattle Times late Wednesday evening indicated that the full union may be given a chance to vote on the deal, though IAM 751 President Tom Wroblewski came out this morning stating that no vote would be offered at this time. In an email sent to union members, which Airchive obtained a copy of, Wroblewski explained that “Boeing’s offer was only on the table Thursday so long as I agreed to recommend the offer and urge you to vote yes on it. But I could not recommend you accept this offer. When I said we couldn’t do that, Boeing withdrew the offer immediately…so there is no offer to vote.”
Boeing attempted to clarify their position Friday afternoon following Wroblewski’s email, stating that the “company did not withdraw offer because it was rejected.” Consequently, there was no need to withdraw. Whether or not that leaves a hole for union leadership to re-engage is not clear, but the door has presumably been left open at least a crack.
Boeing’s counter-offer proposed upping the signing bonus from $10,000 to $15,000 per member, as originally reported by the Times. It also dropped a new wage structure that saw new members climb the pay scale at a much slower rate. However management stuck to their guns on the most unpalatable of provisions: pension and benefit changes. Union leadership balked, and Boeing announced it would be their “best and final” offer.
That the talks happened at all was considered a hopeful sign. Boeing had said that it did not intend to re-enter negotiations with the union after IAM membership rejected the contract extension by a two to one margin a month ago,. Likewise, the IAM International President Tom Buffenbarger remarked as recently as December 4th that “to date, there has been no further contract between The Boeing Company and the IAM. I can only assume the matter is now closed.”
Both sides had been facing political pressure to return to the bargaining table following the vote. Local union leadership offered to come back to the table first, perhaps realizing Boeing appeared to call their bluff. Boeing initially dismissed the idea and pressed ahead with requesting bids from other locations.
However, Ray Conner, President and CEO of Boeing Commercial Airplanes, and IAM District 751 President Tom Wroblewski had been engaged in what Boeing described as “talks” since Monday. The talks appear to have quickly escalated into negotiations with news that the union had offered a proposal to Boeing. Hope for a breakthrough collapsed late this afternoon on the news that Boeing had offered a counter-proposal that union leadership rejected out of hand.
Also tied into this week’s negotiations was a separate agreement committing final assembly of the 737 MAX to the existing Renton site through 2024. This now becomes another open question mark as Boeing gears up to begin MAX production in 2017.
“We entered these discussions to address the concerns we were hearing from our employees,” said Ray Conner, president and CEO, Boeing Commercial Airplanes in a statement issued early this evening. “We’ve listened to the union leadership and had an open dialogue in hopes of moving toward each other. Unfortunately the offer, which would have ensured this great airplane for the Puget Sound region, was immediately rejected by the union leadership.”
In a statement posted on their website District 751 President Tom Wroblewski said “Our members want to build the 777X, and we believe Boeing’s best chance for success for this vital airplane program is for our members to build it here however, the price Boeing demanded was too high. Our senior leadership team could not recommend Boeing’s counter-offer.” Wroblewski went on to say that “Machinists Union pay and benefits make up less than 5 percent of the total cost of building an airplane and for these pennies on the dollar, Boeing gets in return the most-skilled, most-productive aerospace workers in the world.”
Meanwhile, while talks/negotiations with the IAM were underway, Boeing’s 777X site selection process was progressing at a rapid clip. The deadline for sites to apply for consideration to receive part or all of the program came and went earlier this week. Despite a laundry list of expensive demands that the Wall St Journal likened to a “pricey corporate beauty contest”, Boeing received proposals from 22 states, including several that they had not solicited bids from.
In sum, a total of 54 sites are now being evaluated. The existing list includes several existing Boeing sites such as Long Beach, CA; Charleston, South Carolina; Huntsville, AL; and Salt-Lake City, Utah. Other states who submitted bids include Arizona, North Carolina, Texas, and Wisconsin among others.
Boeing says its final decision is still on track for mid-January as the for the 777X production target timeframe to begin in 2017, with first flight scheduled for 2019.
Boeing launched the 777X to record orders at last month’s Dubai Air Show following months of buildup. Despite the big purchases, airlines such as Emirates have sought reassurance that the 2020 entry-into-service date will not be compromised by the kind of production, supply chain, and labor issues that bedeviled the 787 program. In rejecting the initial proposal in November, Union membership had in part hung their hat on the belief that airlines would refuse to accept airplanes not built in Everett.
Members, many of whom were vocal with the way the situation was handled, quickly began to see that Boeing was willing to call their bluff. The company reported being out and about seeking sites the very next day. Boeing has continued to maintain an aggressive timetable, saying that a decision would be reached in January of 2014.
*Jeremy Dwyer-Lindgren in Seattle and Chris Sloan in Miami contributed to this report.