Washington State Gives Boeing What it Wants, Now It’s Up to the Union

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Claiming that the deal will guarantee “tens of thousands” of jobs for the state, Washington’s legislature has approved an $8.7 billion package of incentives for The Boeing Co. (NYSE: BA) to ensure that the company builds its new 777X aircraft on the shores of Puget Sound. An additional package to improve the area’s transportation infrastructure worth about $10 billion is scheduled to be considered by the legislature later this month.

Boeing has moved its corporate headquarters out of Seattle, to Chicago, and opened a non-union manufacturing line for its 787 Dreamliner in North Carolina. The state of Washington wants to stop the bleeding and is willing to take some hefty hits to its tax collections in order to do so.

The 787 plant in North Carolina is Boeing’s first non-union shop and both the union and the state of Washington want it to be the last. The International Association of Machinists and Aerospace Workers (IAM) leadership has negotiated a new labor contract with Boeing that would take effect in 2016 and that cuts wage increases for its members, reduces health care benefits, and lowers the company’s contributions to its defined benefit retirement plan.

The IAM membership is scheduled to vote on the proposed contract this Wednesday. Union members are unhappy with the proposal, but a company spokesman has already threatened to locate the 777X plant outside the state if the proposed contract is rejected.

The state legislature and the governor want to keep Boeing’s jobs in the state and the $8.7 billion package will certainly help. Union members will be under serious pressure to approve the contract or they’ll get the blame if more than 30,000 jobs migrate to the southeast.

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