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Boeing v. Machinists: Time for an Inslee-vention

With the two sides not speaking and more than a dozen states courting Boeing, the governor may be our last hope to keep the 777X in Washington.
Unlike these existing 777 models, the new 777X may not be built in Washington.

Unlike these existing 777 models, the new 777X may not be built in Washington. Courtesy of Boeing

When Missouri Governor Jay Nixon called the state legislature into special session last Monday, it removed any lingering doubt about how serious other states are about landing Boeing’s 777X assembly line — the one the company was willing to build here. Another hint came when the United Auto Workers, which represents Boeing assembly line workers in Long Beach, Calif. publicly announced that it was happy to accept the pension reforms rejected by the Machinist Union workers in Washington State. I guess union brotherhood only goes so far.

More than a dozen states have a December 10th deadline to present their incentive packages to the company.  Most will include both tax incentives from government and wage incentives from workers. Boeing got the first half here, when Washington lawmakers approved a multi-billion dollar tax package, only to see the union rank and file angrily reject a contract extension that included benefit concessions supported by their own national office.

So what now?  

Simple. The workers have two choices. They can stand by their current contract and watch the 777X line disappear — like the second 787 line did — along with  8,000 direct jobs and thousands more indirect ones. Or, they can deal. Boeing already is, except they’re doing it in other states with other unions.

Before we get to how and how much both sides deal, let’s acknowledge that neither side handled the recent negotiation well. The company negotiated with the union’s national officers, who apparently believed they could deliver an affirmative vote. But the resulting agreement was unveiled to the workers in a way that almost guaranteed a hostile reaction: a brusque, take-it-or-leave-it-and-vote-right-away offer that front-loaded enough ill will to make a “yes” vote an uphill battle from the start. OK. Point made, lesson learned.

But the clock is running, and Boeing apparently meant it when company officials said they are no longer negotiating with the Machinists. Cue the Governor.

Jay Inslee wasted no time putting a pro-Boeing, bipartisan package together that preserved the company’s low tax rates until at least 2040, fast tracked the company's permitting process in a way that should serve as a template for all companies in Washington and tossed a few million into jobs skills and education. The vote was overwhelmingly positive, underscoring the bipartisan support on both sides of the Cascades enjoyed by the 98-year-old company. Governor Inslee can say he did his part.

But leadership isn’t just about rallying people behind a bill. Sometimes it’s about bringing people together. If Boeing isn’t going to negotiate with the workers, then the Governor has too.

He has credibility with workers and management, plus the Machinists have had a few weeks to cool off. They know that under the existing contract the 777X lands elsewhere, and it is not in their interest to let that happen. Inslee knows that losing the line doesn’t help him politically and that keeping it here does, especially if it looks like he helped snatch victory from near certain defeat.

So, everyone has an incentive to make this work. 

Pension reform is going to happen sooner or later; it’s inevitable in both the private and public sector. Even under the company’s current offer, the Boeing retirement package is enviable for blue and white collar workers alike. And while 16 years is a long time for a worker to toil until he or she reaches the top of the wage chain, six years is too short — save any profession but the NFL. Twelve years is reasonable.

Governor Inslee needs to convince the union to make concessions on both items. In return, he should urge Boeing to sweeten its signing bonus from $10,000 to $13,500. Yes, it’s a face saving gesture. But given what it will cost the company to create a new assembly line elsewhere, the bonuses are a bargain. 


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Comments:

Posted Wed, Dec 4, 7:01 a.m. Inappropriate

You're too funny. Why in the world would you expect us to believe that the Governor could come to the rescue when he already presented a "give away the farm" proposal to his colleagues.

Corporate World rules professional sports, amateur sports, aircraft, automotive and washing machine manufacturing, agriculture, port authorities, Wall Street and everything else.

Inslee will do little more than postulate, like any and all politicians. Why? He needs a job more than a conscience...

giorgio

Posted Thu, Dec 5, 7:47 a.m. Inappropriate

You would rather have the IAM be "right" and pricipled than employed?

The hard truth for the IAM is there are folks in Missouri and other places that can do the work, get a raise over their current jobs, and increase their standard of living. They are worth what they produce. Others can match that production and cost less.

If Boeing is as abnormally profitable (they are doing very well) as you suggest, other competitors will come in to the market to be slightly less profitable (but do well, not very well) at a lower price point and compete for those workers.

A Canadian company is trying to fill that space and not getting orders. Bombardier (Brazil) is doing smaller commercial jets and has not ventured into that space. Airbus is taking some Boeing market share. Nope, the profits aren't high enough to draw another investment group into the market to hire away IAM and SPEEA workers. They have to take a hard look at the value of the goods they produce and the cost at which they produce it. They have to dance with the partner they came to the dance with until other partners are drawn to the dance by high profits.

Posted Thu, Dec 5, 2:49 p.m. Inappropriate

Good points. Bombardier is Canadian. Embraer is Brazilian manufacturer you are referring to.

Posted Wed, Dec 4, 7:21 a.m. Inappropriate

Boeing will do the rational thing: assemble these wings outside Washington using less expensive, younger workers.

The IAM local's membership rejected the contract Boeing's management proffered for good reasons. The suggestion that increasing the "signing bonus" by $3,000 would change lots of peoples' votes now is patronizing and flat wrong.

It's appalling that Inslee called his surprise special session to hand those tax breaks to that wildly profitable company. That was a shift of a massive tax burden from a rich entity that can afford it no problem onto the backs of the lower middle class. Everyone gets that, right? The democrats now are going to raise regressive state and local taxes.

Those Boeing tax breaks should be repealed. It will continue to employ tens of thousands of people around here for the indefinite future. If its stock drops a penny as a result that'd be a small price to pay.

crossrip

Posted Thu, Dec 5, 2:50 p.m. Inappropriate

Good work, Crossrip An entire post without one mention of Sound Transit. I'm impressed!

Posted Wed, Dec 4, 8:33 a.m. Inappropriate

Why is it perfectly acceptable for any corporations top priority to be its own bottom line, but anathema for workers to use the same logic in their decision-making?

Commentators like John Carlson essentially want the Machinists to "take one for the team" in accepting a contract that impacts their bottom line in hopes of securing a product line that would benefit the next generation of workers rather than themselves.

Furthermore, the credibility that Gov. Inslee has with workers was already put to the test when he asked 'how high' in response to Boeing's order to 'jump' for their special-interest tax breaks; his credibility with workers - and much more of his political base - would evaporate if he became the Boeing shill that John Carlson and others think he should be.

Yes, the governor should do everything he reasonably can to promote job growth in Washington - and he can very credibly claim to have already done that. Taking the advice of a conservative who would love to see him fail would be just about the dumbest thing he could do.

Posted Wed, Dec 4, 4:51 p.m. Inappropriate

Your comment reads as if you believe the machinists get no benefit from having jobs.

kieth

Posted Wed, Dec 4, 9:24 p.m. Inappropriate

They don't get the same wealth of benefits from their labor that the head shed in Boeing does.

Djinn

Posted Thu, Dec 5, 9:50 a.m. Inappropriate

Why should workers who already have jobs vote for a contract that offers them more work in the future for fewer benefits - especially if many of the current generation of workers are close enough to retirement that they won't benefit all that much from airplanes being built more than a decade into the future?

Would YOU voluntarily give up your pension plan and increase your out-of-pocket healthcare cost for 'the good of the regional economy' and the sake of knowing that the next generation of colleagues have jobs, albeit with fewer benefits than their predecessors earned?

Posted Thu, Dec 5, 2:54 p.m. Inappropriate

Yes, I would. Because I would know that when I eventually lose my job, I'll be looking for one without a pension and increased out-of-pocket health care expenses for an inferior health insurance.

Same situation for the next generation of workers. It's not a matter of if private sector pensions are a think of the past, but when.

Posted Wed, Dec 4, 9:46 a.m. Inappropriate

John Carlson: Reality exists even if you choose not to acknowledge it.

It will hurt in the short term to loose (portions of) Boeing, but we as a state will be much stronger all around if we wish them well now. Boeing is a valuable business tenant, however when the tenant demands a remodel and lower rent, it's time to encourage them to move.

Your article is all about "the states competing" and that puts Boeing in charge. If there were two or more competing manufacturers, they would be competing for our mojo.

Your article seems to accept and encourage what amounts to socialism (equalize the worker's lifestyle by lowering wages and spreading the societal cost amongst all the people, "for the good of the people of this state").

Posted Wed, Dec 4, 10:39 a.m. Inappropriate

I'm for letting Boeing pack up and leave. There are more positive benefits for Washington State in them leaving than staying. The biggest benefits would a lot less drama and industrial pollution.

Djinn

Posted Wed, Dec 4, 10:41 a.m. Inappropriate

UAW is right to accept the pension reforms. Take a look at what's happening to Detroit and Illinois pensioners. Defined benefits plans have a way of disappearing, as happened to United Airlines retirees and many others. Bankruptcy court can wash away pensions. The way to guarantee you'll get a pension is to contribute part of your own paycheck, get the employer match, and manage your money with a retirement investment provider like Vangard or Fidelity. To be sure, this requires the employee to pay attention, learn a bit about investing, and take some responsibility for their retirement portfolio. But it's the employee's money from day one.

gadfly

Posted Wed, Dec 4, 11:48 a.m. Inappropriate

Let the love affair end. Boeing loves the Evergreen State as long as we give her billion-dollar gifts, in exchange for diminishing jobs. She's already been seeing other lovers for years; better to say buh-bye to her rather than lavish more under-appreciated $love her way. After Boeing leaves we might find that a very large proportion of soil, air, and water pollution leave with her; that our 'canary' species including Orca begin to reproduce and recover once Boeing's industrial chemicals are no longer in the soup. Let's transition our workforce into sustainable transportation industries using renewable energy; the Governor's Apollo Project can be looked at for guidance.

elemental

Posted Wed, Dec 4, 11:49 a.m. Inappropriate

You're dreaming, John. Jay Inslee isn't going to be able to stop the train from pulling out of the station because he's not the IAM president...Tom Wroblewski is. The governor can only offer Boeing so much, but he can't make any union accept company demands. A facilitator is not going to help close this breach because the damage is done and (as you mention) there are several states willing to give Boeing both tax incentives AND a workforce that won't price themselves out of their jobs.

Boeing is no longer a Seattle-based corporation and the people who run the show out of Chicago are mostly not from this area. They've stayed as long as they have because there weren't other workable locations for them in the past, but that is no longer the case. Love Boeing or hate them, this is the new reality: The company is no longer required to do business in the Seattle area to make a profit, and the exodus is only beginning.

Posted Wed, Dec 4, 1:09 p.m. Inappropriate

First of all;
WA. gave nothing to Boeing to keep them here. The State just proposed to take less from the company. Keep that in mind when you are complaining about the big bad bird maker. Essentially the State was only offering something that would ultimately be paid for with tax income from the company, employees, and ancillary economic activity.

Second;
Inslee is strictly a Party Drone. He always has been. The Party is an extension of union boss offices. As such, Inslee and co., are incapable of proposing and executing a serious challenge to the private clubs (unions) who invest nothing, create zero jobs, and exist only to enhance conflict.
Yes, it would be more democraic to make WA. a State where workers are not Forced to join, or pay for, private organizations. It would do a lot toward bringing political focus back to the needs and desires of the general public instead of the fantasies of old timey Laborites.

Third;
Machinists will move to to the work if none is available in Washington. They will work for the best deal they can find, at whatever compensation is paid. The State of WA. can't move. The general public can live in the rubble after the going away Party.

Fourth;
The primary "concessions" are going to become realities eventually anyway. Ultimately workers will want control over their own retirement instead of relying on the fortunes and good will of former employers. Health care coverage will eventually flatten out until everyone "enjoys" the same basic coverage. The Gold Plans will disappear from the public eye. Why vote to move future jobs out of State to "protect the pride of a chosen few". How proud will they be later in life when the reality sets in.

Inslee is best off staying out of the spotlight and under the radar. That's pretty much his career M.O., and it has obviously served him well (MIA).

Jamesa

Posted Wed, Dec 4, 3:08 p.m. Inappropriate

The future will involve a local agrarian economy. Until then . . . somebody give Airbus a call.

Posted Wed, Dec 4, 5:07 p.m. Inappropriate

If Boeing had not been based here, say they were located in California, do commenters here think we would have the other technical, scientific businesses that are located here? I doubt it. There existed here, after WWII a sizable population of engineers who were capable of designing missiles and guidance systems and orbiting vehicles. Boeing hired some brilliant people and brought a lot of them to the Pacific Northwest. I think their presence made many startups feasible. This history is not something the machinists need to think about, their question is to be decided individually and purely on their own interest. But the tax breaks are probably good for us all, unfair or not.

kieth

Posted Thu, Dec 5, 6:44 a.m. Inappropriate

How, exactly, do you think the tax breaks for Boeing "probably are good for us all"? No Boeing engineers' "startups" amounted to anything for 99% of the people here.

Those tax breaks for Boeing mean I and the vast majority of my neighbors will pay higher regressive taxes. They are not good for "us".

Explain whatever logic you may be employing to reach the conclusion you did.

crossrip

Posted Wed, Dec 4, 5:59 p.m. Inappropriate

What would Bill Boeing do?

afreeman

Posted Thu, Dec 5, 3:25 a.m. Inappropriate

Hi John,

"Simple. The workers have two choices."

Yes we do, but those two choices are either to accept the company's offer or wait until our contract expires and negotiate a fair contract with the company.
See John the decision to build the second 787 line was made even before the IAM started negotiating with the company to keep it here. It is the same where the the location that the 777X wings will be built, that has already been decided.
Boeing is involved in a campaign to see how much money it can get from Washington state and how little it can pay it's employees to build it's planes.
Personally I think the state should offer up the 8.7 billion it proposes that will benefit Boeing to all aerospace companies.
If Airbus was a factor in the mix do you think Boeing would be trying to low ball it's employees? We all know the answer is NO!

derskine

Posted Thu, Dec 5, 2:38 p.m. Inappropriate

Emirates, Boeing's largest 777 customer has already told them they only want 777X's that were built in Everett. Also, S. Carolina doesn't have a production certificate yet. Everything completed there comes to Everett to get certified for flying (and fixed, if necessary, which it is necessary).

Boeing's own customers don't want planes from anywhere else, and S. Carolina still can't certify planes to carry passengers. Between this and the ability to go after other aerospace and advanced manufacturing sugar daddies, tell me again why we should be freaking out?

nullbull

Posted Thu, Dec 5, 2:51 p.m. Inappropriate

So Boeing must have its assembly facilities in Washington?

Then there was no need to give it multi-billion dollar tax breaks. Indeed, we should increase taxes on it.

The small cost to Boeing of those taxes can be passed on to Emirates.

crossrip

Posted Thu, Dec 5, 2:56 p.m. Inappropriate

I agree with John Carlson...Oh no! I must be turning into a Republican!!!

Posted Fri, Dec 6, 9:43 a.m. Inappropriate

Some good comments here, but I'm genuinely surprised at some of the antipathy toward Boeing. In the last dozen years, five aerospace competitors, including Rolls Royce and Bombardier, checked out the prospects of doing work here in Washington. All of them passed. Were Boeing not here, they wouldn't locate here, either. Let us also remember that unlike most high-tech companies in this region, which are right-to-work, Boeing is a union employer. Work rules are more rigid; salary schedules are higher than what the market would otherwise offer. It's not easy doing business in that environment, especially when Airbus is doing assemby work in non-union states. That is why it is worth having the Governor step in to try and grow Boeing here, rather than preside over its fade-to-black. Here's another reason: There is absolutely no downside in Jay Inslee making the attempt. If he succeeds, he's a hero. If he doesn't, at least he made the attempt against long odds.

Posted Fri, Dec 6, 6:39 p.m. Inappropriate

And of course Mr. Carlson, in a show of solidarity with IAM members will happily sacrifice a share of his future earnings in order to gain these 8,000 taxpayer subsidized jobs for the region. Seattle is not Detroit, and Boeing is not General Motors. While I don't wish to see Boeing or its jobs leave, I am also not willing to play an American version of race to the bottom in which states compete for jobs by offering right to work rules, and less pay and benefits. Boeing is a highly profitable company and for them to stick a gun to the head of its workers and say negotiate our way, take it or leave it, and have our political class lamely shrug their shoulders and suggest they take one for the team is ridiculous. The workers are those with a dog in this fight, keep the politicos out of it.

KgSmyth

Posted Fri, Dec 6, 8:41 p.m. Inappropriate

Wake up, KgSmyth. Most of the people in this state (including most workers in both print and electronic media)have taken far deeper economic hits than the machinists. "Race to the bottom"? Far from it. The machinists will still be the most handsomely compensated assembly workers in the state, with health care and a retirement plan beyond the reach of most white-collar workers. The only question is this: Will those jobs be here.....or elsewhere? Because there is no "fight". Boeing is simply opting to see whether there are other states - and unions - that don't want to "fight". Didn't take long to find them.

Posted Sun, Dec 8, 9:34 p.m. Inappropriate

Mr. Carlson:

I believe you are missing the point of these comments. It is not about the "deal with the union members"...that is their private business.

It is about the extortion conjured up with the clandestine help of the Governor and legislature by Boeing corp. Don't you see? Sometimes when regular people are pushed to a point, they turn their back, no matter the cost. That is what we have here. Simple disrespect not only of their own workers but a dictatorial stance towards every citizen in this state.

I urge you to take another look at your premises and conclusion, which equate to socialism. Boeing is free to compete amongst other states to find a cheaper/better/faster/etc. deal. Let them.

You appear to come from the position that "it's the best deal we can get" and I think the commentators are telling you, "let's roll the dice".

Posted Sat, Dec 7, 9:11 a.m. Inappropriate

This is the factory where Boeing has asked for, according to the Seattle Times:

• “Site at no cost, or very low cost, to project.”

• “Facilities at no cost, or significantly reduced cost.”

• “Infrastructure improvements provided by the location.”

Additional incentives it lists include:

• Assistance in recruiting, evaluating and training employees.

• A low tax structure, with “corporate income tax, franchise tax, property tax, sales/use tax, business license/gross receipts tax, and excise taxes to be significantly reduced.”

• “Accelerated permitting for site development, facility construction, and environmental permitting.”

This is not exactly the free market, folks.

I don't think Washington can, and probably should, compete with places like Alabama on these grounds. The state is basically being asked to pay for an airplane factory and cancel all taxes in order to have the honor of hosting it. These kinds of deals usually end up having negative value for the state, since the costs in subsidies are bigger than the value of the jobs created. I suspect the Machinists are being set up as the fall guys so that Boeing can relocate to a more obliging location without getting too much heat.

DannyK

Posted Sun, Dec 8, 12:31 a.m. Inappropriate

Inslee simply is not smart enough for any aspect of his job, let alone this one.

NotFan

Posted Mon, Dec 9, 11:38 a.m. Inappropriate

Mr. Carlson,

Let's keep this simple. It's not your job. It's not your livelihood. It's not your pension or your health care. I'm sure the machinists have considered the dangers of losing their jobs, and their generous benefits with it. But it's not up to you or any other politician to gamble with their livelihood, present or future. You don't get to gamble with their current standard of living, it's up to them. Surely a smart guy like you understands this.

KgSmyth

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