Will Boeing Workers Nix Givebacks in Forced Re-vote?
In November 31,000 Machinists at Boeing rejected an 11-year contract extension packed with big concessions, in a 2-1 vote. Highly profitable Boeing wanted to eliminate pensions, under the threat of moving work on its forthcoming 777X plane out of Washington state.
Unhappy that members rejected the concessions it had negotiated, the IAM International has now scheduled a second vote for January 3. This time around, local union leaders in District Lodge 751 are 100 percent opposed and are doing their utmost to ensure a second rejection.
The vote by this large industrial workforce could be a last stand for private-sector pensions for new hires.
Here 35-year Machinist Jim Levitt gives a shop-floor view of the dispute, with Boeing and IAM International leaders on one side and local officers and members on the other.–Editors
Immediately following the November 13 rejection, Boeing began soliciting “bids” from other states and localities for the 777X work. A couple of newspapers got to see what Boeing was demanding in its request for proposals. Pretty outrageous: free land, a building for free or low cost, worker training, lowered taxes… the list went on.
Newspaper columnists at some of the sites made sport of the audacity of it all. First-born sons, anyone?
by Carl Finamore
Boeing unleashed a bidding war in 22 states seeking to become alternative production sites for the 777x wide-body wing fabrication facility and airplane assembly line.
“Race to the bottom” bids came from an array of bipartisan liberal and conservative politicians, each pitching literally billions of dollars in tax write-offs, lower wages, and compliant labor forces that “would not strike,” as Mobile, Alabama, Mayor Tommy Battle put it.
Washington state had just passed legislation offering Boeing $8.7 billion in tax breaks over 16 years, the largest state corporate subsidy in U.S. history.
But, not to be underbid, almost the entire California congressional delegation wrote Boeing that “we have every confidence that the State of California…will respond with a very competitive application for Boeing to consider.”
A Georgia economic-development official told Reuters the state was “salivating,” after the Machinists’ rejection vote. Utah officials boasted that their state was named by Forbes magazine as the most “business-friendly” in the nation. Meanwhile, Texas Governor Rick Perry tweeted that his state “is a right-to-work state w/ low taxes, smart regulations & skilled workers—perfect for @Boeing 777x manu!”
The Seattle Timesquoted the financial secretary at United Auto Workers Local 148, which represents Boeing workers in Long Beach, California, as saying that his union had already accepted some concessions the Machinists in Washington rejected. For one thing, he said, new UAW Local 148 workers don’t get pensions—something the Machinists, he observed, have refused to give up.
UAW 148 faces Boeing’s closure of its C-17 military transport production line in 2015.
Local 148 President Stan Klemchuk told the Times that “if an extension were offered [to get the Boeing work], the membership would take it in a heartbeat.” He told Labor Notes, “Of course we would like to get the work but we are not trying to steal any jobs.”
The world’s largest aerospace company reported profits of $6.3 billion in 2012. An experienced Boeing unionist said “labor costs account for only 5 percent of production costs.”
Union sources said the IAM International refused District 751’s request to postpone the vote by even one working day to give more time for review of the contract by workers just returning from the annual holiday period.
Meanwhile, back here in the Puget Sound, the media heaped all sorts of blame on us stupid Machinists for throwing away jobs. There was a lot of anger from union members toward the elected leaders of District 751 for not having opposed the contract offer, and even more toward the International for having “led” the process.
International President Thomas Buffenbarger sent us all a letter “explaining” what had happened in the November fiasco. At no point did he take any responsibility, or state forthrightly what his recommendation would have been. But his summary of the Boeing proposal read like it came from the company, and was totally misleading. A chart entitled “average wage rates” showed instead the maximum rate in each labor grade, the rate that wouldn’t be reached for over 20 years.
Because there had been no contact with Boeing since the vote to reject, Buffenbarger said, he had to assume “the matter was closed.” We received that letter just a couple of days before the matter proved to be anything but closed.
My own guess, after the November vote, was that nothing would happen until about the second week of December, giving Boeing the face-saving “out” of having solicited bids from other states, and the International the “out” of coming back with something better than the first scandalous offer. Then they could dangle a big ratification bonus in front of us right before Christmas.
Get Them on Board
Sure enough, word leaked out on Tuesday, December 10, that the union and the company were meeting. That meeting included not just the International’s “consultant” and the District Lodge 751 president, who’d been in on the earlier talks, but all the business reps from District 751. That indicated that Boeing had figured out that if it wanted a contract, it had better talk with the business reps who’d helped ensure the November offer went down in flames.
At this meeting, the business reps and District Lodge President Tom Wroblewski told Boeing the pension was non-negotiable, and that there was no point to further meetings if the company insisted on freezing it.
The next day, the union presented a proposal. From what I heard it essentially extended our existing contract, which doesn’t expire till 2016. The defined-benefit pension would remain in place, the progression step system would remain as it is now (six years of progression for new hires, then a “zoom” to full rate), general wage increases would be in the range we’ve been receiving (2 percent annually). A formula would be developed to figure out medical costs, rather than us just taking self-insured Boeing’s word for it.
Thursday, December 12, everything went to hell. Boeing’s bargainers came back with essentially the same offer we’d rejected 2-1, with one change of note: they eliminated the takeaway on the wage progression. No more demand that it take 22 years or more for someone to go from hire-in to maximum rate.
Otherwise, there was to be another $5,000 bonus (in 2020!) and a couple of boosts to dental coverage (in 2020 and 2024). Same freezing of the defined-benefit pension plan in 2016 for everyone, with new hires starting with a 401(k) effective immediately. (Boeing would put in 4 percent of one’s annual wage, which would result in retirement benefits at least 40 percent lower than what the defined-benefit plan generates.)
Here’s the kicker: Boeing made the offer conditional on the union leadership recommending acceptance and going out to sell it to the members.
The District 751 leadership, in the person of Wroblewski (who’d caught so much heat from the members in November for not taking a stand), told Boeing that the union could not do that. Boeing picked up the offer sheets and left.
Now for the really crappy part: Rich Michalski, the retired former International vice president, now a “consultant” hired by Buffenbarger to “lead” the talks, told the Seattle Times , just minutes after the talks broke down, that the members would vote on Boeing’s offer! He spun the offer as “extraordinary.”
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Try not to gag when you read Michalski’s comments.
In response, the 751 leadership published an analysis of the Boeing offer on Friday, December 13. It was exactly the sort of thing that it should have put out before the vote in November, but was prevented by the International.
Boeing Flush with Cash
Boeing had a board meeting scheduled in Chicago on December 15. At that meeting it announced a $10 billion stock buyback, plus a 50 percent increase in the dividend. The stock is up 80 percent for the year. [A company buys back its own stock in order to make shares scarcer and thus increase their price. It is a frequent practice when a company has extra cash sitting around and doesn't want to use it to build new factories or employ people.]
It seemed as if the Boeing board was deliberately out to enrage the IAM membership.
The “yes” voices held a rally that drew about three dozen people.
And then came the real stink-bomb: December 21, Michalski announced we would vote on January 3. District 751 leadership immediately announced it was not in favor of this vote, and recommended that we reject again.
The International said it was sending us details of the proposal, as if we were somehow not properly informed the last time!
The January 3 voting date gives the whole game away: this deal is being rammed down our throats with a calculated voter suppression effort. The International scheduled the vote on a day when many, possibly thousands, of our members will not be present.
Decades back, the union and company negotiated a long break over the holidays, from the day before Christmas until the day after New Year’s. Many, many workers throw in a couple of days of vacation to stretch the break to a full two weeks. There’ll be a lot of missing faces on January 2 and January 3. Many will be more veteran workers, with vacation time to spare—the same workers most likely to oppose this offer.
This is the one time of year when our membership is completely atomized. Not only are there no union meetings, but we won’t even be able to talk to each other at work! The whole thing stinks.
A complicated absentee ballot process was worked up.
On December 23 District 751 emailed its rejection recommendation to the membership. It pointed out that “the International is forcing a vote” and laid out “the facts of the economic destruction you would have to live under for the next 11 years,” while Boeing is “experiencing record profits and backlogs.”
Notably, although the proposed concessions were ostensibly to save jobs, the 751 leaders pointed out that the contract contains no clear promise of work to be done at the site and reserves the right to subcontract or outsource “certain 777X work packages in whole or part.”
(For details on the take-aways, such as lowering future health care benefits without negotiations, read here. Particularly noteworthy are the hire-in rates. This contract would lock them in place until 2024. They’ve changed only once since 1992. Because the minimum wage in Washington state (the highest in the country) is adjusted for inflation, but the Boeing hire-in rates are not, by the end of the contract the first three labor grades at Boeing would be at minimum wage.)
Addressing directly Boeing’s threat to move work, the leaders wrote, “We all understand Boeing may make the decision to locate the 777X outside of Washington, but doing that has nothing to do with our level of pay and benefits. We are faced then with a choice to destroy everything that we have built over 78 years in order to save Boeing from making a decision that puts the future of the company, all its employees (Union and non-union alike) and the stockholders at risk.
“If the company chooses this path of destruction, then they are responsible for it. We, as union members, do not have control over it and have a contract in place through 2016. The customer, the analysts and all of us know this is the best place to build the 777X and stand ready to do that, whether or not this proposal is rejected or ratified.”
On December 26 Buffenbarger posted a letter on the IAM website that channels Boeing management.
There is no hint of any fight in him; and his portrayal of the contract offer is misleading in the extreme. He paints this offer as a substantial improvement over the first offer (the one we rejected 2-1), by counting as an almost $1 billion gain the fact that we are to keep the progression step system exactly as it has been for almost two decades! Never mind the fact that the only reason we kept it is that we voted down the first offer, which he spoke of in equally glowing terms! In his calculation of the “gains,” there is no mention of the enormous cut in retirement benefits.
Both the Washington State Labor Council, AFL-CIO, and the Washington Federation of State Employees/AFSCME Council 28, one of the state’s largest unions, came out strongly in support of District 751’s stand against concessions.
In an open letter, WFSE Executive Director Greg Devereux wrote that eliminating defined-benefit pensions for future workers “sets a dangerous precedent for all workers in Washington State. …If Boeing guts the Machinists’ pensions, how soon will it be before the State follows?
“… if you know a Machinist, if you’re the parent, child, spouse or domestic partner of a Machinist, shake their hand when you see them this holiday season.”
Even more insidious is his insinuation that the District 751 leadership can’t be trusted to conduct a fair vote, even though it has done so for decades without any dispute. He’s ordering a change in the manner of the vote count. Our tradition has been for voting to occur at all the union halls around the Puget Sound. The ballots are then sealed and transported to the main union hall in Seattle, where they are counted in full view of all union members (and much press) who care to observe.
Now, Buffenbarger is ordering that the votes be counted at each individual site. The sub-tallies will be communicated to the Seattle hall, where the result will be announced. This seems like a little thing, but it’s yet another way of atomizing our membership. For most votes, many hundreds of our members, from factory sites in Everett, Renton, Auburn, all over the region, gather in the Seattle hall. If Buffenbarger has his way, that won’t happen this time. He wants silence.
Buffenbarger spends so much space in his letter on the mechanics of the vote in order to give the impression that something illicit has gone on, or is likely to during the January 3 vote. (This is particularly ironic, given that he now faces the first real election of his presidency, by virtue of a court order.) He flips virtually everything on its head when recounting the history of the 777X negotiations with Boeing. It’s hard to imagine someone doing a more effective job on Boeing’s behalf.
The District 751 leadership is standing firm. The new issue of the District newspaper is like nothing I’ve ever seen before—not here, anyway.
The 751 leadership has called a rally for Thursday, January 2, at 4 pm at the Seattle 751 Hall, to bolster the “no” vote. Interestingly, Jay Cronk, who is running against Buffenbarger for IAM President, plans to be in attendance.
Boeing came at us in the middle of a contract, when we are prohibited from striking. This tactic has implications for labor as a whole. It’s so unlike the contract cycles up through 2008, the last time things were “normal.” In 2011, a year before our 2008-2012 contract was up, Boeing used placement of the new version of the 737MAX plane as leverage to get us to accept an “extension.” That four-year contract, through 2016, is what we’re working under now.
With this new extortion around the 777X placement, Boeing is effectively ending any real collective bargaining, now or in the future.