Boeing union vote would end traditional pension

November 13, 2013: 1:38 PM ET
boeing 777x
An artist rendering of the 777X.
NEW YORK (CNNMoney)

Members of the Machinists union vote today on a contract with Boeing that the aircraft maker says will determine whether it will build the next generation of its 777 jets at its Seattle manufacturing hub.

About 20,000 jobs at Boeing and its suppliers are riding on the decision of where to build the 777X, which is set to become a key part of its fleet.

Also at stake is the Machinsts' pension plan, which will be converted into a 401(k) type of retirement program if the contract is approved.

That change has sparked anger among Boeing workers, and raised the odds that the union will vote no on the deal. That could stir up labor unrest that could hurt both Boeing and its airline customers. The Machinists represent 33,000 of the 84,000 Boeing employees in Washington state.

Results of the vote will be reported late Wednesday.

Washington State is doing what it can to retain Boeing's business by approving $9 billion in tax breaks for the company if it keeps the 777X in Seattle. But Boeing says that without contract approval from the Machinists, it will consider building the plane at other locations.

"We're very optimistic it will be ratified, but if not we'll look at other options, and there are many options out there," said Boeing spokesman Doug Adler.

The twin-aisle 777X will be 20% more fuel efficient that the current 777, which it will replace, and is expected to be in service by 2020. Boeing has so far sold 34 of them to Lufthansa. It's expected to announce about $50 billion in 777X sales at the Dubai air show next week, according to Peter Arment, aerospace analyst with Sterne Agee.

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The contract at issue would run through 2024, which is unusually long for a labor deal. But Boeing, which was hit by strikes in 2008, has pushed for the long-term deal to cut the risk of future strikes that would disrupt production.

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"We're trying to show our customers that we are going to have a steady supply of airplanes," said Adler.

Tom Wroblewski, president of the union's district 751 in the Seattle area, has a note to members on the union's Web site saying, "This is an opportunity we will never see again to secure thousands of good-paying jobs in the State of Washington."

But Wroblewski, who lobbied for the tax break bill for Boeing, has stopped short of actually endorsing the proposed contract. And according to the Seattle Times, he ended a union meeting last week tearing up a copy of the contract and calling it "a piece of crap." Wroblewski was not available for comment on the vote.

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Boeing opened a nonunion plant in South Carolina in 2011 to build a portion of its other fuel-efficient jet, the 787 Dreamliner.

The union fought that plant and the National Labor Relations Board sided with the union. The NLRB filed an unfair labor practice case against Boeing, charging the new plant illegally punished Machinists for past strikes.

But the NLRB dropped the complaint in late 2011 when the union agreed to the current labor deal, and labor relations have been fairly amicable at Boeing since then. As part of that contract Boeing agreed to build another new jet model, the single aisle 737 MAX, in the Seattle-area.

But if the union votes no on this contract and Boeing moves the 777X to a nonunion plant, that could usher in another era of labor unrest at the company, and could spur the NLRB to bring another unfair labor complaint against Boeing.

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