Boeing may move portions of its airplane construction out of Washington after a local union rejected a contract offer that would have saved the company $8 billion.
A company spokesman told the Washington Free Beacon that the company had no choice but to consider moving construction of some of its largest planes out of the Evergreen State after International Association of Machinists and Aerospace Workers Local 751 rejected changes to wage and retirement plans.
“Since the union rejected the offer, we were forced to pursue all options for locating the 777X,” Boeing spokesman Doug Alder Jr. said. “That process is actively underway, although we are not disclosing which locations we are considering.”
"We are now in a competitive process that will take many things into account," he said.
Talks fell apart after the union balked at the company’s offer to increase retirement contributions by $2,400 per year on the condition that employees accept 401(k)-style plans, rather than the traditional retirement package. Union members currently receive defined benefit plans, which guarantee recipients a percentage of their salary after retirement.
The union’s contract does not expire until 2016, but the company called it to the negotiating table in order to shore up 20,000 jobs, as well as future manufacturing operations of the 777X, which has been produced in Washington for two decades.
The rejection earned them praise from far-left labor supporters, including newly elected Socialist Seattle City Councilwoman Kshama Sawant.
“The only response we can have if Boeing executives do not agree to keep the plant here is for the machinists to say the machines are here, the workers are here, we will do the job, we don't need the executives,” Sawant said at a Monday rally.
Other local labor leaders praised the decision. Jeffrey Johnson, president of the AFL-CIO affiliated Washington State Labor Council, said that it was “no surprise to us that the proposal was overwhelmingly rejected,” in a Seattle Times editorial.
“We could not be prouder of the Machinists at District Lodge 751. By turning down Boeing’s lopsided proposal, the Machinists stood up to defend the middle class,” he wrote.
However, the union’s national leaders, who called on the Washington chapter to take the deal, supported the “lopsided” proposal that they negotiated.
“One of the main things is the international negotiated it behind the local's (and its members backs), … did a lousy job in selling it and tried to shove it down their throats,” one labor insider told the Washington Free Beacon. “It was an F-You vote against the union as much as it was against the company.”
Alder said that the company does not plan on returning to the negotiating table for at least two years.
“We have no plans to re-engage the union on contract talks until 2016,” he said.
Employees won't be the only ones paying for union obstinance. The Seattle Times reports that the state of Washington could see its credit rating downgraded over the loss of jobs.
The union did not respond to request for comment.
This is not the first time the aero-tech giant has withdrawn operations from Washington over labor disputes. In 2011, it decided to relocate construction operations of the 787 Dreamliner plane to right to work South Carolina after the union failed to agree to a temporary no-strike clause. The National Labor Relations Board attempted to punish the move, but backed away after Boeing agreed to build the 737 MAX in Washington.
Alder said the 737 MAX will remain in Washington, despite the union setback.
“Plans are already well underway in our Renton factory for introducing the 737 MAX into production,” he said.
The company plans on selecting a location for the 777X within three months.
UPDATE Nov. 22 12:14 P.M: This post has been changed to reflect an update from Boeing that the company has not yet ruled out Washington State.