Jan. 03--In a bare-knuckled display of corporate muscle, The Boeing Co. convinced its often-unruly Machinists union members to accept a new contract that ends their traditional pension and includes other benefits and wage cuts.
The Friday vote came after an ultimatum from Boeing -- approve the new contract or it would consider moving assembly of the company's next-generation passenger jet and construction of an advanced, composite airplane wing out of the Northwest.
It was a stunning reversal from an earlier vote in November, when the union overwhelmingly rejected a similar contract.
For Sam Butcher-Doty, 24, an apprentice Boeing machinist and the 1,200 other union members at the company's Gresham plant, it was a painful comeuppance. Butcher-Doty voted against the contract, even though it imperiled his job because he felt it was unfair to his fellow workers.
Not that Butcher-Doty had high hopes for the vote. "It's a lose-lose for us either way," he said Thursday. "Either we reject the contract and they move the wing, we go on strike and lose our wages, or we accept the cuts."
The good news for union members is greater job security, if decidedly less retirement security. The good news for the region, in the words of Washington Gov. Jay Inslee is that the state "secured its place as the aerospace capital of the world." Boeing said it will keep assembly of the 777X and its high-tech wing in the Northwest with a yes-vote.
In the earlier vote, the 30,000 Boeing Machinists effectively called the company's bluff, many of them believing the talk of relocation was an empty threat. But as the weeks dragged on and Boeing showed no signs of relenting, union members thought better of their earlier defiance.
Boeing is one of the marvels of the industrialized world.
It is one of the two dominant airplane makers in the world. It employs more than 174,000, most of them in the Northwest. And despite some high-profile glitches with its 787 Dreamliner, the company is on a roll.
It is projected to earn a record $4.5 billion in its 2013 fiscal year on revenue in the range of $85 billion. Air travel continues to grow -- Boeing itself projects sustained 5 percent annual increases in passenger and cargo traffic over the next 20 years.
On Dec. 16, Boeing hiked its dividend by nearly a third, which Boeing CEO Jim McNerney was warranted by the company's "sustained, strong operational performance."
That doesn't sound like a company in trouble. But it's undeniable that Airbus, Boeing's chief competitor, has made considerable strides. The two companies are locked in a fiercely competitive duopoly atop the industry.
Airbus's strength was illustrated in October when it made new inroads into the Japanese market, long a Boeing stronghold. Japan Airlines ordered 31 Airbus A350s, with a list value of $9.8 billion.
The deal indicates Boeing is paying a price for the troubled rollout of its 787 Dreamliner. The company for the first time farmed out much of the 787 production to subcontractors around the world. Resulting production issues and fires that broke out in a handful of 787 batteries led to a temporary global grounding of the aircraft early last year. The issues shook the confidence of some customers.
The next-generation 777X is tremendously important to Boeing, in part because of the 787 problems. And the world's initial reaction to Boeing's 777X has been heartening. Even though the plane is still some six years away, airlines have ordered 259 of them as of October worth an estimated $97 billion.
More than 34,000 of Boeing's 175,000 employees belong to the Machinists union, 1,200 of them at the company's Gresham facility.
They are well paid. Some take home $100,000 a year or more. Even Butcher-Doty, the young apprentice, earns about $30 an hour, or $60,000 annually.
The Machinists also enjoy benefit packages most Americans can only dream about, chief among them a traditional defined-benefit pension plan that guarantees a monthly income for the duration of their retirement.
It's one step at a time - the first being to smooth the way for Boeing to construct a new facility to fabricate the 777X's composite plastic wing.
The tentative agreement features sizable pay raises and inclusion in a worker incentive program.
Pension plans for 68,000 nonunion Boeing workers, including about 1,000 in North Charleston, will end in 2015, the company announced Thursday.