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Originally published November 30, 2011 at 9:43 PM | Page modified December 1, 2011 at 9:18 PM

Boeing, union seal deal for jets, jobs, peace

The landmark agreement unveiled Wednesday by the Machinists union and Boeing should secure thousands of local jobs, end the simmering NLRB lawsuit, and offer an unexpected Christmas bonus to start off a four-year contract extension.

Seattle Times aerospace reporter

Landmark agreement

The proposed deal extends the current contract by four years, to September 2016. Union members will vote on it Dec. 7.

Labor relations: Both sides commit to "a new working relationship" with common goals that include sustaining and growing well-paid union jobs, reducing costs and increasing productivity to deliver airplanes at competitive prices.

Job security: Renton gets final assembly of the 737 MAX, with parts fabricated in Auburn and Frederickson. Boeing will reduce the number of nonunion supplier employees performing work at the widebody plant in Everett. And if the Wichita defense plant closes, the military-systems installation work on the Air Force tanker will move here.

NLRB case: The union will inform the government that its grievance with Boeing over the placement of work in South Carolina is resolved. With that settlement, the National Labor Relations Board will likely drop the case against Boeing.

Economics: A signing bonus of $5,000 paid upon ratification. Wage increases of 2 percent each year of the contract, plus a new incentive plan that could add bonuses as high as 4 percent each year. The pension multiple is increased each year by $2 per year of service, reaching $91 in 2016. Union members' health-care costs increase across the board.

Source: IAM

quotes This proposal between Boeing and its machinist union illustrates what can be... Read more
quotes It wasn't a huge increase in medical co-pays, raises were in line with previous... Read more
quotes So workers realized that they need the company to have the work, and the company... Read more

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The landmark agreement unveiled Wednesday by the Machinists union and Boeing should secure thousands of local jobs, end the simmering NLRB lawsuit, and offer an unexpected Christmas bonus to start off a four-year contract extension.

Beyond all that, though, the surprise pact may signify a new era for two forces whose bitter adversarial relationship and recurring clashes have repeatedly shaken the region and endangered one of its economic cornerstones.

Machinists union officials said the tentative agreement, to be voted on by members next Wednesday, represents "a new day" in labor relations that should help the Puget Sound region maintain its preeminence in aerospace manufacturing.

The agreement commits both sides to "a new working relationship" and to common goals that include sustaining and growing well-paid union jobs while also lowering production costs.

Gov. Chris Gregoire, who was aware of the secret talks and kept in close touch with Boeing Chairman and CEO Jim McNerney and IAM General Vice President Rich Michalski throughout the negotiations, described the outcome as "absolutely wonderful."

"At a time when I don't get much good news, this couldn't be better," said Gregoire.

Richard Aboulafia, an aerospace analyst with the Teal Group, said the prospect of labor peace transforms the outlook for aerospace in Washington state.

"As long as you can resolve the labor problems that have hobbled Puget Sound, the future looks extremely bright," Aboulafia said.

If union members ratify the deal next week, Boeing commits to build the new 737 MAX jet in Renton, which will mean new capital investment there and in its parts plants in Auburn, Frederickson, and Portland.

The company will also cut down on nonunion supplier employees doing work at the widebody plant in Everett.

And it may bring more Air Force tanker work here from Wichita, Kan.

The proposed four-year contract gives Boeing labor peace during the protracted ramp-up in jet production that's ahead.

The union has also settled its differences with management over the 787 assembly plant in South Carolina and will ask the National Labor Relations Board to drop its case against Boeing.

A high-level joint committee, with top union leadership and Boeing senior vice presidents, will meet monthly to review and discuss key business and workforce issues, including setting new performance targets that will determine annual incentive bonuses.

Secret talks

The deal was hammered out in secret talks that began in earnest in mid-October. Both sides said Boeing made the initial approach to the union, eager to make an early contract deal.

Only a small circle of people on both sides were aware of the high-level talks, which culminated in intensive negotiations at the South Park union hall last week, according to people with knowledge of the talks.

Leading the talks on the company side were Vice Presidents Ray Conner, who previously led negotiations with the union and now heads sales at Boeing Commercial Airplanes; and Rick Stephens, who heads employee relations from Boeing's Chicago headquarters.

For the union, the key players were Michalski; Mark Blondin, the former IAM district president who now heads the union's nationwide aerospace negotiations; and Tom Wroblewski, president of District 751.

10 months early

The contract extension comes 10 months before the existing contract expires.

The union pushed to nail down a contract early to ensure that Washington keeps final assembly of the modernized 737, the MAX. Earlier this year McNerney had signaled it could go elsewhere.

Many in the aerospace industry couldn't see a business case for Boeing to put the MAX anywhere but Renton. But the union — stunned by Boeing's choice in 2009 of South Carolina for its second 787 Dreamliner assembly line — couldn't take that for granted.

"The union saw Boeing put the second 787 line someplace else," said industry analyst Scott Hamilton of Issaquah-based aviation consulting firm leeham.net. "Boeing was fully capable of putting the MAX someplace else, too."

With Boeing facing heavy global competition for building single-aisle jets, "the world is changed," said the IAM's Blondin, in an interview.

For both the company and the union, "everything is always at risk," he said.

Boeing was offering a commitment to secure jobs in Renton, Auburn, Frederickson and Portland, said Blondin. "When you've got an offer on the table to put that in writing, I'm not going to call that bluff on behalf of this entire community," he said.

The tentative agreement also stipulates that if Boeing closes down its defense plant in Wichita, the work of installing military systems on the Air Force tanker will be done at Boeing's Puget Sound-area facilities.

Plant losing money

Boeing recently acknowledged it is considering closing the Kansas plant because it doesn't have enough work and is losing money. If that happens, said Blondin, most of the added work will likely be done on the tanker assembly line in Everett.

For Boeing management, one impetus for an agreement was securing labor peace for several years as it prepares a sharp production ramp-up.

But another key element that gave the union some leverage was the NLRB case, in which the company is accused of illegally retaliating against the union when it chose South Carolina as the site of the second 787 plant.

That case had already resulted this summer in the release of embarrassing company documents revealing details of internal discussions in 2009 over the siting of the second line in North Charleston. Imminent legal rulings threatened to force the release of additional internal documents, such as executive emails.

The NLRB's general counsel, and likely the Obama administration, would have to sign off on any formal settlement, but the union made clear Wednesday it will push to end the controversial case.

If the contract is ratified, the Machinists will notify the NLRB that "our issues with the Boeing Company are behind us," Wroblewski said.

Lafe Solomon, acting general counsel at the NLRB, issued a statement calling the deal "a very significant and hopeful development," and suggesting he is ready to act once the deal is finalized.

Although the NLRB case has become a hot political issue, with Republican presidential candidates taking Boeing's side against the federal agency, U.S. Rep. Norm Dicks, D-Bremerton, said he sees no political obstacle to a settlement because Boeing's 787 Dreamliner work in North Charleston, S.C., will also be secured.

"The people in South Carolina are going to be happy," said Dicks. "They won't object to this case going away."

In an interview, Gregoire said she doesn't want to be overoptimistic but hopes the deal may restore labor relations at Boeing to an era that seemed to end when former CEO Harry Stonecipher in 1998 publicly rejected the notion of the workforce as a "family" and warned employees, "If you don't perform, you don't stay on the team."

Said Gregoire: "They are looking like they are returning to the days of yesteryear when it really was the Boeing family."

Dominic Gates: 206-464-2963 or dgates@seattletimes.com

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