Leeham News and Analysis
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Leeham News and Analysis
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IAM 751, in dramatic reversal, accepts Boeing 777X contract
The members of the International Association of Machinists District 751, in a dramatic reversal of its November 13 landslide contract rejection, today approved a revised contract offer from Boeing by a vote of 51% to 49%.
http://www.youtube.com/watch?v=0TCWIIs9P2c
Approval means Boeing will produce the new composite wings for the 777X and undertake final assembly of the airplane right here in Puget Sound (Seattle). The 777 Classic is assembled at Boeing’s Everett factory, home to all wide body assembly since it was built specifically for the 747. The 777 Classic’s wings fuselage panels are produced in Japan and shipped to Everett for assembly to the fuselage.
The outcome was in doubt as 751 members began voting at 5am today. Rallies leading up to the vote were largely anti-acceptance. Pro-acceptance rallies were lightly attended.
Sentiment on blogs and in Comment sections of the Seattle papers overwhelmed positive comments. Reports from the field polling places suggested the contract would be rejected.
The vote secures jobs for the IAM members at the expense of ending the defined pension plan in 2016 in favor of a 401(k) approach to retirement benefits. It also extends of Letter of Understanding (#42) providing that 737 MAX and KC-46A tanker production remains in Puget Sound through 2024, to which is when the 2016 contract has now been extended.
The controversial contract may bring mixed feelings to union members, but it brings unfettered job to elected officials, the Puget Sound supply chain and other interested parties who feared Boeing would take all the 777X production elsewhere at the cost of nearly 30,000 direct and indirect jobs and huge hits to the local economy.
But make no mistake: when Boeing proceeds with a new airplane design to replace the 757, followed by one to replace the 737, we’re going to see another round of efforts to browbeat the union and the state into more concessions or give-backs in exchange for production to be located here.
The timeline for decisions for a 757 replacement should begin around 2017. Decisions for a 737 replacement should begin around 2020.
Tonight’s IAM 751-Boeing 777X contract vote (Update, 9p)
Vote results and IAM 751 statement are here.
We’ll be at IAM 751’s headquarters tonight for the vote results. Follow us on Twitter @leehamnews for news throughout the evening from around 7pm. We’ll post results here when announced, which is estimated between 8-9pm PST. Depending on how things are going, we may also update this post during the evening before the results are in. Update, 7:30pm: We’re at IAM 751 HQ awaiting the vote. Vote counting is done here and is either underway or done at the other locations except Everett, where high turnout and slow process delayed counting, which was estimated to begin at 7:30. IAM officials don’t know yet how long it will take to complete the counting and call in the results. We’re still standing by for result announcements around 9pm until advised otherwise. Unlike the November 13 vote, it’s very quiet here. The prediction is for a “no” vote. We shall see.
Update 8:30pm: Nothing new, still in holding pattern.
Update 9pm: Everett done counting, results in about 20 min, now said to be too close to call.
Countdown to IAM-Boeing vote January 3; poll results; union urged to accept; no tax breaks from WA if Boeing splits work
- The New York Times has a good summary of the “optics” of the IAM-Boeing 777X situation.
Two third of Readers in our on-line polling this week urged IAM 751 members to accept the Boeing contract offer that contains major concessions, notably on pensions, in exchange for Boeing selecting Washington State to assemble the 777X and produce its wing here.
The unscientific polling is broad-based and not restricted to union members, and should not be considered indicative of the outcome of the vote today. Results are to be announced tonight around 9pm PST.
The polling results below are as of January 2. Voting is still open so totals may differ in the original post vs what is reported below, but voting subsided to the point where results should remain constant.
Should IAM 751 Members Accept or Reject the Boeing 777X contract?
| Answer | Votes | Percent | |
|---|---|---|---|
| Accept | 366 | 67% | |
| Reject | 183 | 33% |
Key political leaders in the Puget Sound area met Monday with Ray Conner, CEO of Boeing Commercial Airplanes, before meeting with the press and urging the members of IAM 751 to approve the contract.
The Puget Sound Business Journal has a detailed story, including the dire consequences if the contract is rejected.
The Associated Press has a similar story.
IAM 751 sent a letter December 23 to its members recommending a No vote and detailing why.
According to the civic leaders meeting with Conner, the BCA CEO said if the 751 members don’t accept the contract, the wing production will be sent elsewhere. According to the news reports, Conner was more ambiguous about the fuselage work and final assembly.
The Requests for Proposals Boeing issued after 751 members rejected the first contract offer on November 13 allowed for splitting the FAL and the wing production among sites. But we confirmed with Washington’s Director of Aerospace that if Boeing does this, none of the $8.7bn in tax breaks the state offered Boeing will be extended; it’s an all-0r-nothing offer.
Missouri is the only other state to go public with its tax break offer: $1.7bn from the state and $1.4bn from St. Louis County.
Texas, California, South Carolina, Alabama, Utah and Georgia are among the 22 states that offered up 54 sites to Boeing in the RFP process. North Carolina and Pennsylvania are the only ones to publicly reveal they were eliminated in Boeing’s early analysis of the RFPs.
The contract offers set off internal strife at the IAM. District 751 leaders are feuding with the IAM International leaders, who negotiated the contracts with Boeing and who have largely run roughshod over 751. Local leaders oppose ratification of the contract and the International urges acceptance. International forced the January 3 vote over the objections of the District.
But our polling also shows the District 751 leadership is in trouble. A large percentage of our Readers blame 751 leaders for the current mess and more want to see the District leaders replaced than the International heads.
A large number of Readers also believe District 751 should be decertified as Boeing’s union representation and a large number believe 751 should divorce from its affiliation with IAM International.
We understand that neither decertification nor “divorce” can occur until 2016 under the current contract, or until 2024 if the contract is Accepted and extended. One of our Readers believes that if this contract is rejected, it is possible for changes to be made this year. We don’t know the answer.
These poll results are below the jump.
Odds and Ends: Looking ahead in 2014; Boeing letter to Machinists; TWA retro choice; Screw it, let’s do it on Virgin [plane]
Looking ahead in 2014: We wrote this outlook for 2014 for CNN International Travel. More seats, more fees, quieter year.
IAM 751 members vote Friday on the ‘777X contract.‘ Here is a letter dated December 27 from Boeing to the Machinists making the case to vote for the contract.
It is the TWA Twin Globe livery that is the clear choice by our Readers for American Airlines to select for a retro livery.
Source: Photobucket.com. Convair 880
TWA’s last livery was a distant second. (We didn’t particularly like this design.) The design should probably go on an MD-80, the derivative of the DC-9 on which the Twin Globes livery appeared.
Source: Ed Coats Collection. Douglas DC-9-15.
Which TWA livery should join American Airlines’ fleet as the “heritage” airplane?
| Answer | Votes | Percent | |
|---|---|---|---|
| Boeing 707 Twin Globes Livery | 944 | 53% | |
| Final Blue/Red/Gold Livery shown on Boeing 757 | 427 | 24% | |
| Red Stripe, Solid Tail Livery shown on Boeing 747 | 165 | 9% | |
| 1950s Livery seen on Lockheed Constellation | 158 | 9% | |
| Boeing 707 Delivery Livery (no Twin Globes) | 56 | 3% | |
| Reverse Red livery shown on McDonnell Douglas MD-80 | 23 | 1% |
In other news and irreverence:
- We’re chuckling at this one: The slogan “Screw it, let’s do it” is on a Virgin [airplane, that is]. Check out this story on CNN International Travel.
- Readers know we like going to the polar regions–we’ve been to Alaska’s Arctic Circle and to 80 degrees north in Svalbard. But this is not something we care to endure.
- Today is the last day to vote in our polls concerning the IAM-Boeing ‘777X Contract.’ We’ll post the results before the machinists begin voting on Friday.
- Aspire Aviation has a long profile on the 777X here.
The deeper, longer term implications of IAM’s Boeing contract vote January 3
There are deeper, longer term implications for the January 3 vote by IAM 751 members on the revised contract proposal from Boeing than have been discussed in the public domain.
- Contract extension to 2024 brings “labor peace,” but also significantly weakens the union in the future.
- The replacement for the Boeing 757 lurks in the background.
- So does the replacement for the 737 MAX.
The near-term implications have been discussed ad nausea: for employees, vote for a contract that includes concessions, notably on pensions, or risk losing the assembly site for the 777X. For the states, Washington could be a winner, or a big loser. The state that’s awarded the assembly site would be a big winner. Suppliers will supply Boeing regardless of where the 777X is assembled.
Another near-term implication we’ve talked about: the fall-out on the IAM, both at the International level and the District 751 level. No matter how the vote turns out, there is a civil war within 751 members who are royally upset with their leadership and others who believe in it. The civil war between 751 and IAM International HQ will continue well beyond the vote, with the prospect that International could simply depose all the 751 leaders and place 751 under a trustee “for the good of the union.”
But there are much longer term implications of the vote.
Vote in poll on IAM Boeing 777X contract
The IAM 751 members vote Friday whether to Accept or Reject a contract proposal from Boeing that will extend the term to 2024 and contain several contract concessions in return for assembling the 777X in Everett (WA) and producing the wing here. The issues are, to say the least, controversial.
Here’s a chance to express an opinion whether the contract should be Accepted. We can’t control who votes–in other words, members and non-members can vote in our poll. But absent any polling of the members, this is the only mechanism to gauge opinion in advance of the vote. We’ll release results next Friday morning.
The contract terms and conditions, how the contract was negotiated and sent to members and the split between 751 leaders, IAM International and within the 751 membership are controversial.
Some IAM 751 members are unhappy with 751 leadership and the International.
IAM International president Buffenbarger rallied against pension cuts at Boeing’s IAM 837 District
IAM International President Tom Buffenbarger advocates that IAM 751 approve a contract from Boeing that freezes current pensions and adopts a 401(k) style pension for future hires. Yet Buffenbarger advocated to IAM 837 (the union District at Boeing’s St. Louis plant) reject a contract that did just this.
Here is Buffenbarger in an IAM-produced video.
http://www.youtube.com/watch?v=YGUMyxeLv2M
IAM International to force vote over 751 objections on Boeing contract offer (via Seattle Times)
Update, 3:30pm PST:
IAM 751 leaders have come out opposed to ratifying the contract. This, and a response to Ray Conner’s earlier email, is below the jump, reprinted here. (There is no unique link.)
Original Post:
The Seattle Times broke the news this morning that the IAM International will force a vote on the second Boeing contract offer over the objections (and probably by now, the figurative dead bodies) of IAM District 751 union leaders.
The contract proposal is here.
Some members of the 751 union have been seeking a vote since the 751 leadership, headed by Tom Wroblewski, rejected a counter-offer from Boeing that Wroblewski said he could not support.
Wroblewski said the offer was contingent upon his endorsement of the offer and, unable to do so, he claimed Boeing withdrew the offer. Boeing said it did not, and would not comment about whether the offer was actually “contingent” on Wroblewski’s endorsement. But in a letter issued to employees by Ray Conner, CEO of Boeing Commercial Airplanes, it contained a phrase that under any fair interpretation certainly leads one to conclude Wroblewski was correct.
Conner wrote:
We were sincere in asking for the union leadership’s commitment to support our improved final proposal as a tentative agreement that would be taken to a vote by IAM members with a recommendation for approval.
We’ve been of two minds on the vote issue.
- If indeed the offer was contingent upon Wroblewski’s endorsement, and in good conscience he could not, then he was correct in not sending the issue to members for a vote. If Boeing were to release this contingency, then it should go to a vote. This should easily have solved the problem.
- We certainly respect Wroblewski for sticking to his principals. At the same time, we also believe in democracy (with a small “d”) and believe the members should have their say.
What we are crystal clear about, however, is the continued meddling by International in this entire affair. It was International that [m]ucked this up from the beginning, starting with leading the negotiations, forcing the first agreement on 751 leadership, figuratively placing them under house arrest to silence them, [m]ucking up the communication with the membership and mishandling the media through the voting process.
Now International is inserting itself again, and no prophylactic is going to contain this mess.
This should be something sorted out between 751 and Boeing.
International’s motivations seem more intent on preserving its dues-paying jobs at any cost than on doing what’s best for 751 members and for Boeing.
In February 2010 we suggested 751 ought to divorce from International because even then we didn’t believe International had the best interests of the local at heart. We’re more convinced than ever this is the case.
It is so clear that Boeing has International running scared. Regardless of the outcome of a new vote, International will rue these day some day.