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.

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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

Vote for the Top Commercial Aviation stories of 2013

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Feel free to nominate other stories in Reader Comments.

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.

  1. 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.
  2. 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.

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Boeing Board OKs $10bn stock buyback, 50% hike in dividends in move sure to anger IAM members (Updated)

Update, 10 pm PST: IAM 751 gave us its reaction; it’s at the bottom of this post.

Original Post:

At a time where feelings are running raw with IAM 751 members, the Boeing Board of Directors authorized a new, $10bn stock buyback. This follows a $7bn stock buyback program from 2007 that was suspended from 2009 and January this year, when it was resumed. The suspension was due to the 787 and 747-8 program cost overruns, compensation and related costs.

The Board also approved a 50% hike in dividends to shareholders.

“The buyback and dividend announcement today reflects our normal cash deployment strategy – one that ensures investment in our core businesses (R&D, facilities) and workforce, returns value to shareholders, manages our pension obligations and maintains our strong balance sheet and credit rating,” Boeing spokesman Charles Bickers wrote to us in an email.

“The announced returns get us back to the levels that we have previously targeted. Boeing’s shareholders –including thousands of employees– have been very patient as the company came through the last few years. There were no share repurchases between 2009 and 2013 and there was only one dividend increase between 2009 and 2012, meaning that the average annual rate of dividend increase in that period was a little over 1 percent.”

But the actions come at a sensitive time, on the heels of a 2-1 contract rejection vote by 751 members of major contract concessions demanded by Boeing in return for committing to build the 777X and its wings in Washington State. Terminating the defined pension plans in favor of a 401(k) plan was a key element in members voting against the contract.

Drastically altering the wage page scale, extending by 10 years the time it would take to get to the top of the scale, called zoom, was another “ask” by Boeing. A third point of contention was the proposal to require employees to pay 33% more in their health care premiums.

A revised Boeing contract offer gave on zoom and the premiums but held firm on the pension. The offer was also said by the 751 leadership, to be contingent upon the leadership sending the offer to a vote with a “Yes” recommendation, which they refused to do. Talks broke off, and the leadership continues to face an open revolt among some members demanding a vote. A bevy of Washington politicians have also urged the leadership to allow a vote.

“This announcement does not alter the fact that Boeing offered marketing leading compensation and benefits associated with the contract extension. As I said above, the announcement is consistent with our prudent and balanced cash deployment strategy, which includes investment in our core business (R&D, facilities), our workforce, managing our pension obligations, returning cash to shareholders and maintaining a strong balance sheet and credit rating,” Bickers wrote.

IAM 751 as yet has not commented.

Update: IAM 751 gave us this statement:

“Boeing is looking forward to a period of long-term financial stability made possible primarily by the men and women of District 751,” said union President Tom Wroblewski.

“While other production sites have failed to hit their targets, we have delivered record numbers of airplanes at record profit margins this year, helping drive the stock price to record highs,” he said. “Given this, I feel it’s wrong for the company to try to take away pension benefits that provide our members with their own future financial stability.”

IAM won’t release its offer details; IAM v Itself v Boeing

IAM’s offer to Boeing: While IAM 751 released its analysis of the Boeing contract offer of last week, it refuses to release its own offer to Boeing. We asked for it and received a terse, “That’s not available.” Thus, we are left with 751’s analysis that Boeing’s offer is unreasonable and basically unchanged from the one voted upon November 13 (and rejected by a 2-1 margin). But we don’t know how reasonable or not the 751 counter-proposal was, which was rejected by Boeing.

751’s refusal to disclose its counter to Boeing also leaves its own membership in the dark.

Meanwhile, a Chicago Tribune columnist isn’t too enthused about the Boeing “asks.” Chicago, of course, is where Boeing’s corporate headquarters are and Illinois is one of the state’s bidding for the 777X project. As we wrote on December 9, the audacity of Boeing’s asks are mind-boggling. Others are waking up to this fact.

Another analysis notes how little leverage the IAM has right now because this contract negotiation comes well before the current contract expires in 2016, and as a result 751 can’t strike.

But mark our words: if Boeing puts the 777X elsewhere after trying to strong-arm the union (in their view), there will be a retaliatory strike in 2016 regardless of the offers. This happened in 2008 as payback for the 2002 and 2005 contracts and outsourcing that came from them.

The IAM 751 members are going to strike themselves right out of a job. But we have seen the IAM shut down a company rather than give concessions, and call that a victory. (Eastern Airlines, 1991.)

IAM v Itself v Boeing: It’s no surprise that the IAM v itself v Boeing continues to dominate the aerospace news, at least in the US.

The Seattle Times has two stories in its Sunday paper worthy of note:

IAM is between a rock and a hard place (IAM v Boeing)

Two key players in the drama (International v Local)

Separately: