Unlike these existing 777 models, the new 777X may not be built in Washington. Credit: 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.
The adjusted contract extension could be submitted the day before the company reviews contender state proposals. Should Boeing approve, the union would agree to a last chance, last minute, up-or-down vote.
Hopefully the company will sign off on the deal, the rank and file will greenlight their approval and we can all celebrate Christmas a week or two early.
Things can fall apart at any point, but things can also come together. Something needs to happen, though, and soon. Like today.