He Said, She Said, As Everett Watches 777x Talks Between Boeing and Machinists

Boeing and the Machinists were talking with each other over the last few days but that has ended again. Here’s what each side had to say publicly…

Statement From the IAM751 Home Page:

Talks between the Boeing Co. and Machinists Union District 751 have ended after the two sides failed to reach an agreement on a proposed contract extension that would have guaranteed the 777X would be built in Washington state.

“Our members want to build the 777X, and we believe Boeing’s best chance for success for this vital airplane program is for our members to build it here,” said District 751 President Tom Wroblewski.

“However, the price Boeing demanded was too high,” he continued. “Our senior leadership team could not recommend Boeing’s counter-offer.”

“On Wednesday, the union had offered Boeing a preliminary contract proposal that would have guaranteed the company a total of 16 years of labor peace by extending the current contract, which has been in place since 2008, until 2024.

“Boeing’s leadership has said time and again during this process that this was a top priority, and we were wiling to give them that,” Wroblewski said. “We were willing to give them labor peace.”

However, Boeing’s counter-offer on Thursday was mostly unchanged from the proposal that Machinists had rejected by a 2-to-1 margin on Nov. 13, demanding steep concession in retirement and health benefits while limiting future pay increases.

Boeing’s offer Thursday was contingent on union leadership recommending acceptance, Wroblewski said.

“This we could not do,” he said. “Our members had already rejected this.”

Wroblewski said the union will continue to make the case that Washington is the best place for Boeing to build the 777X, which is the latest derivative of Boeing’s best-selling widebody jet.

“Machinists Union pay and benefits make up less than 5 percent of the total cost of building an airplane,” he said. “And for these pennies on the dollar, Boeing gets in return the most-skilled, most-productive aerospace workers in the world

“Any objective analysis will show that Boeing’s best business case is to build the 777X in Washington, utilizing the skills, experience and dedication of our Machinists Union members,” he concluded.

Wroblewski said he does not regret attempting to negotiate a new deal. “Going back to the table was the responsible thing to do,” he said. “We just couldn’t get to an agreement. Again, the price was too high.”

Press Release this afternoon from Boeing:

Boeing (NYSE: BA) and the International Association of Machinists & Aerospace Workers District 751 have completed a third day of meetings following an attempt last month to secure a contract extension.

This afternoon, in response to a proposal presented yesterday by the union to secure 777X work in the Puget Sound region, Boeing presented a best and final counterproposal. That offer was rejected by the union leadership.

Boeing’s revised 8-year contract extension would have built on the company’s previous offer with substantial economic improvements. On top of the previous $10,000 signing bonus, employees would have received an additional lump sum bonus of $5,000. Employees also would have received additional dental benefits.

The proposal would have kept in place the current rate in which employees accelerate to the top of the pay scale – commonly referred to as “ZOOM.”

The company would have committed to placing final assembly of the 777X, as well as the fabrication and assembly of the airplane’s composite wing, at a Boeing location in the Puget Sound area. In addition, a separate agreement committing final assembly of the 737 MAX at the Renton, Wash. site would have been extended through 2024.

As previously proposed, the long-term contract extension would have included changes to the way members earn future retirement benefits. Employees would keep everything they have accrued under the existing defined benefit plan and earn future benefits under a defined contribution plan with the new Special Company Retirement Contribution, starting November of 2016.

“We entered these discussions to address the concerns we were hearing from our employees,” said Ray Conner, president and CEO, Boeing Commercial Airplanes. “We’ve listened to the union leadership and had an open dialogue in hopes of moving toward each other. Unfortunately the offer, which would have ensured this great airplane for the Puget Sound region, was immediately rejected by the union leadership.”

The 777X site selection process has continued in parallel with this week’s IAM meetings. In an overwhelmingly strong response from interested participants, Boeing has received proposals from 22 states, many of which submitted multiple sites for consideration. A total of 54 sites are now being evaluated in the next critical stage of the process.