The IAM 751 membership last night handed Boeing and the IAM International a major defeat, rejecting the proposed 777X contract with a 67% vote.
This was the classic cluster-fuck* from the get-go. IAM International, for reasons we have yet to figure out, drove this train. IAM 751 local leadership was largely a by-stander in the negotiations, and it got mugged in the process. International sprung this package on the 751 membership by surprise and Boeing gave the membership one week to make a decision. The contract terms and conditions called for huge take-aways (as the membership sees it), little time to absorb the data, or to communicate to the membership from the IAM’s own leadership.
The governing council of 751 voted not to even present the package to the members, reportedly by an 18-10 vote (a 64% margin, which as it ultimately turned out, wasn’t far off from the 67% membership rejection of the contract). The Local was overruled by International.
Local leadership, and its media team, were put on ice, with all communications being handled by International. 751’s leader, Tom Wroblewski, was sidelined but his pique hit the public domain a week ago when at a meeting he called the contract proposal “crap,” tore it up and vowed to see if he could cancel the vote and return to the bargaining table. International overruled him on all counts.
Boeing management, as it has in the past, completely misread the mood of the union, thinking jobs would trump dismay over the give-backs. Instead, the members were pissed at Boeing for what they perceived as a take it-or-leave it ultimatum; they were pissed at the IAM International; they were pissed at the Local leadership (whom they understandably believed were complicit); they were pissed at the time line; they were pissed at the terms and conditions and they were pissed at the surprise.
If Boeing management should have learned anything through the years, it should have been you don’t want to piss off the IAM membership.
*This language violates our own standards for this blog, but sometimes there simply is no other way to put it.
Failure to Communicate
In a classic Paul Newman movie, there is the well-quoted line, “What we’ve got here is a failure to communicate.”
There was that in spades in this fiasco.
IAM International didn’t communicate well with the 751 members, and having failed to rely on the 751 leadership in negotiations—who know their members better than International—they shouldn’t have been surprised by the negative reaction from members.
Compounding the situation, by putting the 751 leadership and media teams on ice, International compounded its errors.
This short clip from Cool Hand Luke pretty well sums up the situation on so many levels.
Amateur Hour by IAM for the Media
The International media relations team handled the media poorly. Calls and emails went unreturned. In past elections, media was allowed into the counting room by 751 to observe the vote. Not this time. Media was initially told by International it would be confined to the parking lot on the night of the vote, with a five minute photo op to take pictures and B-roll (TV tape) of the counting. Then the media was banned from the counting room entirely. The explanation: privacy concerns. This was greeted skeptically because media had been allowed into polling places all day, it took pictures of and filmed members and conducted interviews.
Then, at the last minute, some pool photography was allowed. Finally those of us in the parking lot were allowed into the hallway outside the counting room.
Word that the media would be banned from observing the counting quickly got around to members, and suspicion was fueled that the IAM International would rig the vote to pass the contract. This is indicative of how International’s bungling allowed the atmosphere to get darker and darker as time passed.
The IAM International flak unintentionally revealed International’s naïveté several times about the local dynamics. The flak told media waiting for 751’s Wroblewski that the International didn’t understand the deep emotion (on both sides). She kept promising Wroblewski, who was to make the results announcement to the membership and then face the media, but after making a very delayed announcement to his members, the press conference was cancelled. Wroblewski and an International official scurried upstairs with The Seattle Times’ Dominic Gates in full pursuit, who was bruskly told to turn around. The International flak acknowledged little understanding (and seemed somewhat in awe) of the intensity of the events swirling around her head, and of the media crush. Handling of the media and cooperating for coverage was amateurish compared with the professionalism of 751’s media representatives who had been put on ice (or, in the words of one 751 member, put under “house arrest”) by International.
Disgruntled Members within an angry union
Having become angry with the IAM International and 751 Local leadership, there is talk of members throwing out Wroblewski and installing a more militant leader who will stand up to Boeing and the International more than they perceive of Wroblewski. There is also talk of decertifying IAM and joining another union. Either action would probably be challenging. But in February 2010, a few months after Boeing elected to place 787 Line 2 in Charleston (and after the IAM International meddled in those negotiations that were involving 751), we suggested 751 needed to divorce from International. That caused quite the stir within the IAM. Maybe that time is now.
The State of Washington
Gov. Jay Inslee stepped up and quickly announced an incentive package for Boeing, calling the Legislature into Special Session to approve the plan. Included were millions of dollars for training and some other stuff, but the centerpieces were extending 787 tax breaks granted in 2003 to 2040 for the 777X, amounting to $8.7bn—the largest in US corporate history—and a $10bn transportation plan so Boeing and its suppliers could move stuff around Washington (and notably, highly congested Puget Sound) more easily. The Legislature approved everything but the transportation plan. The transportation plan calls for raising the gas tax 11 cents over 10 years, and Republicans balked. All parties agreed to take this part of the incentive plan up later this month (this was before the IAM vote).
Following the vote, Inslee said Washington will compete for the 777X anyway, but on the surface an $8.7bn tax incentive and (if approved) a $10bn transportation plan will be tough to match or beat. Except for one thing.
The tax incentives, an extension of the 787 tax deal, were found to be illegal by the World Trade Organization in the long-running international trade dispute between the US and the European Union. This finding is under appeal, and as a result Inslee waves this detail away.
There are two problems with doing so. The first is obvious: what if the US appeal is denied and the finding stands? Then the basis of the proposed 777X tax breaks becomes null and void. Then what?
The second is Inslee’s own prior approach to findings by the WTO that were appealed. When he was a Congressman, Inslee carried Boeing’s water on the KC-X tanker competition by the US Air Force. The WTO found that EADS’ entry, the Airbus A330-200, was subject to illegal subsidies. The EU appealed this finding, but in contrast to Inslee’s blithely dismissing this today with respect to the 787, he vociferously demanded that the USAF take the WTO findings into account despite the pending appeal, going so far as to introduce a bill in Congress to this effect. Even the US Trade Representative’s office said this couldn’t be done, so Inslee dropped that call. Aside from the duplicity exhibited here, his hand-waving dismissal of the presence of the WTO finding presents a risk to Washington should the 777X be sited here, and it gives an advantage to states who will now compete for the project who weren’t subject to the WTO trade dispute and who can offer incentives that aren’t subject to this huge overhang.
Inslee’s 777X package hasn’t gone unnoticed by the EU, which was already beginning a review before the IAM vote.
Where does every go from here?