Thursday, January 2, 2014

Boeing Machinist Union Vote to Determine Just How Strongly Union Workers See Reality

Union Wants Great Jobs to be Made Even Greater

Boeing – Probably Not Bluffing with Threat of a Move of 777x Production

Boeing and its major workers,  the machinists have had a highly profitable albeit rocky marriage.  Boeing is making huge profits, the result of international surge in air travel and the fact that the airline industry for large planes is largely a duopoly, with only Boeing and Airbus major competitors.  The machinists have great high paying jobs, job security and good benefits.  They are among the best well paid blue collar workers in America.

But Boeing is somewhat anti-union.  They moved production to non-union South Carolina, in part to send a message to the union members in Seattle.  The members did not get the message.

After Boeing’s workers in Washington State voted down an eight-year contract extension in November, Boeing wasted little time in soliciting offers from other states to build its new 777X aircraft.

Within weeks, 22 states made proposals to Boeing, with some offering billions of dollars in subsidies to lure a project that would mean thousands of jobs and the prestige of having such a prominent manufacturer.

The local machinists union thinks Boeing is bluffing.  The International parent of the local thinks not.  So another vote is scheduled on a slightly revised contract.  The local thinks this way.

On their website, District 751’s leaders have posted a detailed explanation of what they say is wrong with the revised contract extension, which would be added onto the contract that expires in 2016. One objection is that the extension calls for a 1 percent raise every other year during the eight-year extension.

“It’s a bridge too far; it’s asking too much from us,” said Wilson Ferguson, president of the Local A unit of District 751. “The problem is that it seems that our international union is complicit and working with the company to push this thing through.”

District 751’s leaders say it makes irrefutable business sense for Boeing to put 777X assembly in Washington State, largely because there is so much manufacturing expertise and experience there. As a result, they see little justification for far-reaching concessions.

“There’s an overwhelmingly strong argument for keeping this project in Puget Sound,” Mr. Aboulafia said. “Boeing would have to be willing to inflict of lot of damage to itself to leave.”

The problem of course is that even if the local is right, they are wrong.  Even if it costs Boeing billions to move production elsewhere, they will do it.  They have to in order to maintain any bargaining position in the future and the company is strong enough to sustain any loss in profits from moving production.  Apparently the local union does not realize this.

 The surest way to lose is to ascribe rational economic behavior to an irrational economic unit.

And while the proposed contract doesn’t promise much in the way of raises, it does have some nice benefits for the union.

Frank Larkin, communications director for the machinists’ parent union, said it was vital to hold the vote soon. “The timing was driven largely by Boeing’s attempt to announce in early January its plans for where it will place assembly of the 777X.”

On Dec. 26, Mr. Buffenbarger, the international’s president, sent a letter to the 31,000 workers eligible to vote, praising the revised deal, without specifically urging a yes vote.

“The total value of the new improvements to the contract offer adds more than $1 billion to the previous offer,” he wrote. “I believe this represents a significant improvement worthy of the membership’s consideration.”

Mr. Buffenbarger said the revised deal added a $5,000 one-time payment, payable in January 2020, on top of the $10,000 bonus Boeing had previously promised upon ratification. In the biggest revision, the new proposal would preserve the current six-year “progression” it takes for new workers to reach full pay. In the first deal, that would have taken 16 years.

Boeing may well be taking advantage of the situation, but they can do so because the situation is to their advantage;  many, many states would like to have the new plant and the jobs and the tax revenue that will go with it.

Reality bites, sometimes it bites hard.  But reality is reality. 

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