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Union Rejects Boeing Deal

By a whopping 2-to-1 margin, Boeing employees affiliated with the International Association of Machinists and Aerospace Workers (IAM) rejected a deal with the company that would have trimmed their pensions – but extended their contracts by eight years and kept production of the new 777X aircraft in Washington State. Each…

By a whopping 2-to-1 margin, Boeing employees affiliated with the International Association of Machinists and Aerospace Workers (IAM) rejected a deal with the company that would have trimmed their pensions – but extended their contracts by eight years and kept production of the new 777X aircraft in Washington State.

Each Boeing employee would have received a $10,000 signing bonus before Christmas, too, in addition to an annual 1 percent raise (on top of cost of living adjustments).

None of that sold them … not even a little.

“We’re all outraged that Boeing is trying to pay South Carolina wages here when our workforce has saved their 787 program,” one machinist told The Seattle Times, referring to the company’s North Charleston, S.C. facility (which is eventually expected to produce 30 percent of the company’s 787 Dreamliner aircraft).

Eventually … 

Now, Boeing is expected to make good on its threat to move the 777X project out of the Puget Sound region.

“Without the terms of this contract extension, we’re left with no choice but to open the process competitively and pursue all options for the 777X,” one Boeing executive said in a statement.

Politicians in Washington State offered the company a record $8.7 billion in taxpayer-funded incentives to land the 777X project.

So will South Carolina open its checkbook in an effort to compete for the thousands of jobs associated with this project?

It’s unlikely. Currently, manufacturing sites in Long Beach, California, Salt Lake City, Utah and Huntsville, Alabama are at the top of the company’s list.

“Boeing South Carolina is unlikely to be chosen because that complex needs all its resources to try to get the 787 Dreamliner on track,” reporter Dominic Gates of The Seattle Times reported this week.

South Carolina lawmakers have already shelled out $1 billion in taxpayer-funded incentives – including $120 million in new borrowing earlier this year.

Labor leaders in Washington State were all over the map on the deal. One day IAM leader Tom Wroblewski was standing with Washington State Gov. Jay Inslee and Boeing executives in apparent support of the proposal – the next day he was ripping up the contract at a meeting with workers.

Officially the IAM did not take a position on Boeing’s offer.

Boeing produces Dreamliners, 747’s, 777’s and KC-46 Air Force tankers in Everett, however the 747 and 777 programs are winding down. In light of this vote, the company could see its workforce in Washington State dwindle to 20,000 from its current level of 40,000. Had the union taken the deal, approximately 56,000 jobs would have been locked in for the next two decades.

This website vigorously opposes Boeing’s reliance on government incentives at the state and federal level. Of course we can’t stand unions, either.

So … a pox on both their houses as far as we’re concerned.

Also, given the extent to which these subsidies shift the tax burden onto existing individuals and businesses in the states where these mega-plants locate, we’re not sure South Carolina’s lack of competitiveness for the 777X project is necessarily a bad thing.

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Will Folks

15 comments

The Colonel November 14, 2013 at 8:16 am

I’m confused Will – are you now saying that maybe having a plant in North Charleston was a good deal for both Boeing and potentially South Carolina?!?

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Will Folks aka Sic November 14, 2013 at 9:38 am

No … read the article. It says these deals shift and raise taxes on existing businesses and consumers. That inhibits job growth – as well as the growth of the consumer economy. I’m not saying Boeing’s jobs aren’t providing an economic benefit – they are – I am simply saying there is a cost associated with obtaining them that no one in the MSM ever considers.

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The Colonel November 14, 2013 at 9:45 am

I dunno Will, the tax incentives in south Seattle ran out a lonnnnnnnng time ago and Boeing is still there providing good paying jobs (at least until the unions kill the goose that laid the golden eggs…)

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Lee Grayson November 14, 2013 at 2:06 pm

Huh? Washington state ponied up big in 2003 and now again in 2013. See the picture? When one deal runs out, corporations like Boeing expect a new one. Just wait until South Carolina’s deals expire. Do you really think Boeing will stay here without getting another huge tax break? Basically, South Carolina only gets to tax the workers, never the corporation. That is how the game is played, son.

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The Colonel November 14, 2013 at 2:31 pm

Wow, how did I miss the 2013 tax deal! I knew about the ’03 deal and it wound up not being nearly as big a break as originally talked about but this 2013 deal is crazy, particularly in a state with no personal income tax – hope them folks look forward to jacked up sales and private property taxes and “gubamint” service fees cause they’re about to get taken to the cleaners.

Hoot November 15, 2013 at 10:16 am

It is the occasional nugget like this, e.g. the 2013 WA state tax deal, that make this site worth the trouble of reading. Almost. Thanks for the 411.

James Miller November 14, 2013 at 8:19 am

I wouldn’t believe ANYTHING that comes out of a Seattle newspaper that deals with Boeing and Unions. They are the epitome of biased.

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venomachine November 14, 2013 at 8:48 am

This is great news for SC. I’d expect the 777X announcement before the new year…

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Smirks November 14, 2013 at 8:50 am

Spoiler: They’ll beg SC for some more incentives, and if they don’t get it, they’ll look for another right-to-work state that will. Someone will pay for the 777X, and gladly at that.

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AThinker November 14, 2013 at 10:13 am

Will, I am curious, you are anti-union, but why? What do you really know about unions?
And, for all you limited-goverment advocates, since when is government entitled to spend tax money to buy business investment? Is that a core function of government?

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? November 14, 2013 at 10:34 am

I really wish there was a clear distinction made between tax breaks and tax subsidy’s, and/or a breakdown of how much in dollars each represents.

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Centrist View November 14, 2013 at 12:46 pm

Video of machinists reaction to contract vote announcement.
http://www.youtube.com/watch?v=LzrMS4K3Hgo

A resounding no from Machinists
http://seattletimes.com/html/businesstechnology/2022253577_boeingmachinistvotexml.html

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scotty November 14, 2013 at 1:01 pm

Boeing has plans that we will not see for some time. It was not by accident that after all the years they moved there HQ to south of Shitcago sold the Wichita facility and built in N. Chasn. I wouldn’t bet against the unions bending over in the next few months.

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tomstickler November 14, 2013 at 9:31 pm

Do you think the union rejection of the Boeing proposal had anything to do with the canceled worker pension plan, the slashed benefits, the appalling 1 percent pay raise issued only every other year?

Or, maybe there was some resentment that the Boeing CEO, Jim McNerney, has headed the Business Roundtable, a lobbying group of top U.S. corporations. Earlier this year that group called for raising the eligibility age for Social Security to 70 years old, as well as crimping back on the benefits (by reducing the index of inflation used to calculate payouts.)

So, while McNerney cancelled the workers’ pension plan and advocated cutting Social Security, his own personal retirement package would net him $265,575 per month if he were to retire right now. No need for him to wait for his Social Security to kick in at age 70, amirite?

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badcatt November 17, 2013 at 1:04 am

As a Boeing employee who voted no on the contract, I have to say I would have been willing to have worked a deal to extend our contract with Boeing. But, my pension is not on the table. Jim McNerney, Boeing CEO will get a pension of over $256,000.00 a month if he were to retire today. I can only guess how much Boeing pays out to retired executives. Not that they should not get a pension, but lets be real here, after making the money Mr McNerey does, some 21 Million a year. Does he need that big of a drain on company resources?

We on the factory floor in Everett don’t know if it was out Union or the Company who stuffed this contract down our throats We had just about 1 week to study it. Our shop stewards did not have any advanced notice of this contract coming up. No input. It had some very generous offers The Bonus, $10K is a lot of money. But over the life of the contract we would give up far more then that just for the changes in medical. I believe we will need to pay more for that and would be willing to discuss it. Moving from a defined pension plan for me is a non-starter. Moving to a 401K is not in my mind a secure way to build a retirement. It is good as part of a retirement plan. We have that now in our VIP plan. However, the deposits are not protected Anyone with a 401K, do you recall what happened to it in 2008? For many of you that is your only nest egg. Our corporations are protecting the top as they sacrifice the workers who make the products. This is not a new way of doing business, Ask around, I bet you have family members who have lost jobs so American corporations can make more money to give to, not the stock holders but the executives and board of directors.

Thank you for the opportunity to make a comment here.

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