Boeing union approves contract lowering cost of military jets
By ST. LOUIS POST-DISPATCH (MCT) Published: February 23, 2014
Boeing Co.'s union Machinists on Sunday approved a deal aimed at lowering the price tag of military jets built in north St. Louis County.
Boeing and District 837 of the International Association of Machinists reached a tentative deal on Wednesday. Union members strongly supported the deal, 1269 to 449, in Sunday's vote.
The agreement is designed to make the endangered assembly lines in St. Louis more “competitive” — as both company and union put it — and boost Boeing’s chances of winning more work here.
It offers buyouts to veteran union workers, lower wages for future hires and lock in a schedule of wage hikes and bonuses for the next 7 ½ years.
Voting started late this morning and ended about noon.
Boeing officials issued a brief statement pointing out the offer’s “attractive” wage and benefit provisions and saying “it will better position Boeing St. Louis to compete for critical future work.”
A message on the District 837 website said the deal was unanimously endorsed by the 12-member bargaining committee.
“The offer is a collective and balanced approach to the issues of all our members and the business needs of the company,” wrote District 837 President Gordon King.
The deal sets up a two-tier wage structure, like those in many recent auto industry contracts. Workers hired at Boeing after March 1 in many job classifications would see their wages top out at levels 8 percent to 49 percent below the top wages earned by people on the payroll today, though a person familiar with the contract said they’d still exceed national averages for aerospace manufacturing. And workers will shoulder more health insurance costs in future years.
But those concessions, coupled with newly created buyout deals that could shrink Boeing’s workforce without messy layoffs, might be enough to help win more orders and thus prolong at least some of the union’s jobs.
That’s especially true on the F/A-18 Super Hornet program, which is set to end in 2016 unless the Pentagon or foreign militaries buy more.
The Super Hornet is being supplanted by Lockheed Martin’s more-advanced F-35 Joint Strike Fighter. Boeing and its allies are urging the Navy to buy more Super Hornets, and a key argument is the plane’s lower price tag. At about $52 million, the fighter’s “fly-away” cost is roughly half that of a F-35.
A lower price will become especially important if, as expected, the 2015 Pentagon budget includes no money for new Super Hornets when it is unveiled next week. That would push the funding fight into Congress, where Boeing will urge lawmakers to add money to the budget for more planes. At that point, every dollar will count.
Boeing also hopes to lower costs to compete for future work on the Navy’s unmanned U-CLASS drone and the Air Force’s T-X trainer jet program. And, running through 2022, the deal is long enough to factor into the competition for the $55 billion Long-Range Strike Bomber program, which the Air Force hopes to award later this decade and build in the 2020s. A team-up of Boeing and Lockheed is favored by some experts to win that contract, and while Boeing has not said it would build the plane in St. Louis, industry-watchers say that’s a logical choice.
But for that to happen, Boeing needs to retain its skilled workforce of engineers, designers and union assembly line workers.
Union leaders, in their letters to members, warn that layoffs are likely by year’s end if the deal doesn’t go through. And their sense of urgency is highlighted by the quick pace of talks on this deal. Formal negotiations began earlier this month, and a deal was announced on Wednesday.
That is in sharp contrast to recent negotiations between Boeing and District 837’s sister local in Seattle, which represents 30,000 workers on its commercial jet programs.
Those talks grew heated enough that Boeing threatened to move production of its 777X jet out of the Puget Sound and drew more than 50 proposals — including from St. Louis — from places eager to have it before union members finally agreed to take pension cuts. But, these days, Boeing Commercial is far more prosperous than Boeing Defense, and workers know it.