Wednesday, November 30, 2011

Boeing and IAM 751 reach settlement on Charleston and Renton

Today is a day for big news out of Washington State. Boeing and IAM 751 which represents Boeing line workers in Washington State have come to an agreement after about 6 weeks of secret negotiations according to the Seattle Times. This agreement will supercede the current contract which expires 10 months from now.

The main provisions of the deal will require Boeing to locate 737 MAX production at Renton (this is logical given current 737 production is there). Boeing used the 737 MAX line as a bargaining chip to win settlement of another Boeing problem...the NLRB suit against Boeing which located the second 787 line in Charleston, SC. The details of this settlement of the NLRB suit are not yet known but I am assuming that it means that the NLRB will not pursue the suit against Boeing and Boeing will not have to shut down the Charleston plant.

Other main points in the 4 year deal is 2% annual raise plus COLA, a ratification bonus of $5000/employee as well as a 2% - 4% pay bonus. All this is pending IAM 751 membership approval. A vote is to take next week.

Dominic Gates said that there will not be an y immediate announcement of the NLRB suit due to it needing to be signed off by the NLRB and Obama. Given the current political environment and how the Republican party has raised its voice over this issue it is a no brainer for Obama and the NLRB.

This is a win on many fronts. It a win for Boeing because it ensures labor peace for four more years and the NLRB is off its back. Presumably the 787s will still be assembled in both Everett and Charleston but the details are unknown at this time.

It's a win for the union as it ensure that 737 production will stay in Renton and that members are getting the pay they expect as well as other benefits. It's a win for the NLRB and the Obama administration, even though they had nothing to due with the negotiations (as far as I know) as the NLRB suit became a huge issue for them in a year before the presidential elections are to take place. It will be interesting to know the details of the settlement of the NLRB suit though. It's a win for both the cities of Charleston and Renton as it will mean that there will be no layoffs at those plants due to non-economic factors.

Here's Boeing's press release on the agreement:

Boeing Announces Intent to Locate 737 MAX Production in Puget Sound

- New airplane to be built in Renton, Wash., pending ratification of labor

SEATTLE, Nov. 30, 2011 /PRNewswire/ -- Boeing (NYSE: BA) today announced that it intends to build the new 737 MAX in Renton, Wash., pending approval of an early contract extension with the International Association of Machinists & Aerospace Workers (IAM), the union representing hourly employees in Washington, Oregon and Kansas.

As part of an effort to improve their relationship, Boeing and the IAM have been discussing the potential for an early contract extension for several weeks. The current contract is set to expire in September 2012.

Independent of that effort, Boeing has been conducting a review of potential sites for 737 MAX production since the company announced in August that it will build a new-engine variant of the market-leading 737.

Boeing has assessed the business case for locating production of the 737 MAX in Renton in light of the economics of a proposed new labor agreement, and the company is prepared to locate 737 MAX production in Renton provided the economics contained in that proposal are achieved.

Upon ratification of such an agreement by hourly employees, Boeing says it will make the necessary investment to produce Next-Generation 737s and 737 MAXs in its existing Renton facility.

"The 737 MAX builds upon the legacy of the world's best single-aisle airplane and continues to generate overwhelming response from our customers," said Jim Albaugh, president and chief executive officer, Boeing Commercial Airplanes. "If our employees ratify a new agreement, building the 737 MAX in Renton will secure a long and prosperous future there, as well as at other sites in the Puget Sound area and in Portland, Ore., where 737 parts are built."

To date, Boeing has received more than 700 commitments from our customers for the 737 MAX. The new airplane is expected to enter service in 2017.
Another important take away is that this agreement may start the healing process in the relationship between the IAM and Boeing. Time will only tell on that account.

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