Boeing Union Votes on Contract Friday

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By Paul Ausick Updated Apr 27, 2020 at 5:59 PM EDT · Published Jan 3, 2014 at 9:10 AM EST

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Union local 751 of the International Association of Machinists and Aerospace Workers (IAM) will vote Friday on whether to accept the revised contract offered by Boeing Co. (NYSE: BA) for its 31,000 members. The revised contract — and the vote on it — have split the local union and its international leadership, and no matter which way the vote goes, the union has suffered a crippling, if not fatal, blow.

The revised contract on offer from Boeing promises a payment of $15,000 for every union member in early 2020 and maintains the current wage increase schedule. The original contract offered a one-time payment of $10,000 and scrapped the wage schedule.

The most divisive issue though is Boeing’s determination to replace the current defined benefit pension plan with a defined contribution plan. Workers who have been with Boeing for years generally reject this part of the contract offer. Younger workers are more interested in having and keeping their jobs.

If the vote goes against Boeing, the company has said it will build a new plant outside the state of Washington to manufacture the new wing for its 777X aircraft and may even build an assembly plant for the plane outside the state. The Washington legislature has passed and the governor has signed-off on a package worth about $9 billion in incentives for the company to build the wing and assembly plants in the state.

Boeing built a non-union plant in South Carolina to manufacture its 787 Dreamliner, and the company moved its corporate headquarters from Seattle to Chicago in 2001. The state does not want to see the bleeding continue.

The union’s international headquarters also does not want to see Boeing move to a non-union state, and that is very likely the reason it forced Friday’s vote on the local. The prospect of losing 31,000 members does not sit well with the 766,000-member IAM.

The local union’s leadership rejected Boeing’s revised contract in mid-December without calling for a vote from the full membership. The international leadership intervened and forced Friday’s vote.

We have said before that no matter how the vote turns out, Boeing wins and the local union loses. If the contract is rejected, the company still has more than 50 locations in 21 states bidding on the 777X manufacturing plants, and it is virtually certain that a non-union location will be selected. If the contract is approved, Boeing gets out from under its current pension obligations after succeeding in splitting the local union from its national leadership.