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Originally published November 9, 2013 at 8:06 PM | Page modified November 9, 2013 at 10:50 PM

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Hard bargain for 777X way of the world today

Seeing the world as it is requires recognizing that Boeing provides us with an asset that has nearly disappeared from the United States: a large manufacturing workforce in one relatively compact region making good wages. Boeing is also the backbone of Washington’s export power.


Special to The Seattle Times

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Samuel Johnson said, “When a man knows he is to be hanged in a fortnight, it concentrates the mind wonderfully.”

It would be unnecessarily alarmist to claim that the Puget Sound aerospace cluster is facing such a lethal moment. Still, the past few years have brought some unmistakable warnings.

Boeing bought its suppliers’ operations in North Charleston, S.C., and established a new assembly facility there for the 787 Dreamliner in a nonunion plant. The company has made several other decisions to move important work out of the area.

While we won assembly of the 737 MAX, our place in the coming 777X has been in doubt.

That changed last week, when Gov. Jay Inslee announced a tentative deal to assemble the new airplane here, as well as to build the jet’s massive composite wings.

In exchange, Boeing wants members of the International Association of Machinists to accept a new eight-year contract requiring major concessions. Inslee also convened a special session of the Legislature to act on several measures, including a transportation-tax package, to secure the 777X.

Yes, Boeing is driving a hard bargain. Machinists would be giving up the blunt instrument of the strike, as well as agreeing to a 401(k)-style retirement plan in lieu of the traditional pension plan, and to accept higher health-care premiums and a longer wait for members to reach the highest pay grade.

On the other hand, if the Machinists agree to the deal, members will get a $10,000 signing bonus, early-retirement incentives and an increased company match for the retirement savings plan.

The deal is far from assured. This is a national union being asked, on a tight deadline, to open and extend an unexpired contract while agreeing to significant givebacks, then voting on the new contract.

Boeing will have overplayed its hand if it believes union contracts are top-down affairs that can be cut in backrooms. The workplace democracy of unions doesn’t work that way, especially when members see a company making record profits, rewarding top executives with lavish compensation while asking men and women on the line to risk their retirement security.

After all, recent years have shown how inadequate 401(k)s can be compared with traditional pensions.

Many members are working on programs that are stepping up production or have a big backlog of orders. The possibility of Boeing eventually leaving the region is not an immediate concern of these workers. Smaller paychecks, higher health costs and loss of pensions are real-life issues in front of their faces.

It’s also important to remember the Puget Sound region is one of the world’s two first-class aerospace hubs, the other being Airbus in Toulouse, France. . It offers talent, skills and institutional knowledge that can’t be replicated. When things went wrong with the 787, Boeing turned to union machinists and engineers to fix them.

Boeing has huge sunk costs here, while the former Vought plant in South Carolina is having trouble keeping up as a Dreamliner assembly line.

All this is true. But we must compete in the world as it is, not as we wish it to be.

Boeing has the whip hand of options, even if they are potentially expensive.

As the country’s only commercial airplane-maker, a huge defense contractor and the biggest exporter, Boeing enjoys tremendous power in Washington, D.C. It has capacity and talent in Southern California and St. Louis. In South Carolina, it has a state hungry for good jobs and willing to do almost anything to get them.

If members approve the deal, it is a potential game-changer.

For one thing, it assures the commanding position of the Puget Sound aerospace cluster for a generation — as much as anything can be assured in this time of disruption. In addition, building the wing here could be leveraged into a wider sector of carbon-composite manufacturing and research.

An agreement could represent a model of how unions can survive and thrive in the 21st century.

Seeing the world as it is requires recognizing that Boeing provides us with an asset that has nearly disappeared from the United States: a large manufacturing workforce in one relatively compact region making good wages. Boeing is also the backbone of Washington’s export power.

While the transportation package might not be the most critical element needed to land the 777X, it should have been approved in the last legislative session. It will benefit the entire state. Only a few obstructionists prevented its passage last time. Maybe now, they will see the light.

This is an imperfect deal. But reality is that way. It would be foolish to play chicken with reality or blow this opportunity. The destructive consequences will echo for decades.

You may reach Jon Talton at jtalton@seattletimes.com



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About Jon Talton

Jon Talton comments on economic trends and turning points, putting them into context with people, place and the environment in the Pacific Northwest
jtalton@seattletimes.com

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