Union workers in Seattle narrowly accepted a long-term contract with enormous cuts from Boeing, capping a year of record profits for the aerospace giant’s shareholders with a hearty smackdown of labor.
The 31,000-member International Association of Machinists District 751 voted to freeze workers’ defined-benefit pension fund and replace it with a defined-contribution 401-k type plan. The deal paves the way for $8.7 billion in subsidies to Boeing that the state of Washington offered through 2040 as an inducement to stay in Puget Sound. The contract also reduces future wages, ratchets up employee healthcare costs and extends the contract eight years, guaranteeing labor peace through the length of a contract to build Boeing’s new 777X aircraft.
Associated Press quoted Wilson Ferguson, president of a local unit of District 751, as saying, “This was a turning point in the labor movement. Pensions were hard-fought battles to get in the first place. Once they're gone, they're gone.”
The deal was pretty much the same as the one rejected 2-1 by the union on November 13, along with some bonus money built in. But that was then and this is now.
In the interim Boeing let it be known that it was willing to build the plane somewhere other than its home state. Twenty-two states expressed interest, and Long Beach in Southern California thought its once-preeminent position in the industry might give it the inside track to land a big chunk of the business if Boeing left Seattle.
Union leadership at the national level favored the new contract, but local leaders did not and opposed putting it to a vote the second time. They lost that battle and then the war, a not unfamiliar scenario for labor since Ronald Reagan was elected president in 1980. The percentage of the nation’s workers represented by unions has dropped from 23.3% in 1983 to 11.5% in 2012, according to the U.S. Bureau of Labor Statistics.
The drop has coincided with a period of stagnant wages and benefits, widening income inequality and the evisceration of the middle class, all of which was exacerbated by the Great Recession. During the past five years, Boeing’s stock price has steadily risen. It was up 204.13% during the period, including a 77.14% boost the past 12 months. The Boeing board of directors approved a $10 billion stock buy back last week.
The part of the aerospace industry that builds large jetliners has been a fairly evenly-divided duopoly since the 1990s, when Boeing and the European consortium Airbus were all that remained of a once-bustling marketplace. Both companies rely extensively on state subsidies.
Long Beach was especially anxious to land a piece of the 777X business because about 2,000 jobs will disappear in 2015 when Boeing’s facility there stops making the C-17 military cargo plane. Before the vote on Friday, California Assemblywoman Bonnie Lowenthal (D-Long Beach) told a Torrance Daily Breeze reporter why she was optimistic her constituents would benefit if Seattle stumbled: “We’re ideally situated geographically. We have the ports nearby, which is an important part of this business. We have a huge trained workforce here with the C-17. We have an existing facility. We have top-notch higher education.”
Seattle, of course, has all those things too. What Long Beach would probably need to offer is to work for less and subsidize more.