By a margin of 51% to 49%, union employees of The Boeing Co. (NYSE: BA) have approved a new contract that will keep production of the company’s new 777X aircraft and wing in the state of Washington. Members of union local 751 of the International Association of Machinists and Aerospace Workers (IAM) originally rejected a slightly different contract offer in November and the local union leadership had rejected the just-approved contract without a membership vote in early December.
The close vote appears to have been won by the local union’s younger members. About 49% of the local’s members are over the age of 50.
The president of the union local had this comment after the votes were counted:
All along we knew that our members wanted to build the 777X, and that it was in Boeing’s best interest to have them do it. We recommended that our members reject the offer because we felt that the cost was too high, in terms of our lost pensions and the thousands of dollars in additional health care costs we’ll have to pay each year.
Now, it’s up to all of us now to pull together to make this airplane program successful. I’m confident we will do that, because as we’ve said all along, this is the most-skilled aerospace workforce in the world.
A report at Reuters noted that the contract was approved by a margin of about 600 votes with about 8,000 members not voting. The local union claims about 31,000 members, some of whom wanted a recount. The international union, which had forced the local to allow a membership vote, refused to permit a recount.
The new contract, which runs through 2024, was backed by the state and local government as well as most investors and analysts because it keeps the 777X program in the Seattle area where these workers have been building the predecessor 777 wide-body plane since 1990. The state approved a $9 billion package of incentives to encourage Boeing to build the new plane in Washington.
Boeing was the best performing stock on the DJIA last year, rising 80% compared with an increase of 25% for the index as a whole. Shedding its pension obligations beginning in 2016 means that even more profits will flow to the company’s management and investors. Friday’s vote should give the stock another shot in the arm when trading resumes on Monday.
Boeing’s shares closed at $137.62 on Friday, in a 52-week range of $72.68 to $142.00.