Now it’s Boeing’s turn to deliver.
On Friday, the Machinists who build Boeing’s airliners in Washington surprised the state – and maybe themselves – by narrowly accepting a leaner contract that comes with a company commitment to assemble most of the new 777X in the Puget Sound region.
It was a landmark vote. The union’s approval of Boeing’s proposed 10-year contract promises to keep Washington’s big, lucrative aerospace industry in place for at least another generation.
The high-efficiency 777X will take Boeing’s successful wide-body 777 into the world of carbon fiber and cutting-edge aerodynamics. Twenty-one other states began frantically bidding for the multibillion-dollar project after the Machinists rejected Boeing’s first contract offer in November.
Contrary to union firebrands, the newly approved bargain is – by non-Boeing standards, anyway – an exceedingly good deal for the workers.
Most of the fury revolved around the proposed shift from a traditional pension to individual retirement accounts bolstered by company contributions. That arrangement is standard among other private employers (if they offer retirement benefits at all).
Risk is shifted to the employee, but if a company puts enough money into the accounts, the risk can work in employees’ favor, because they get to pocket “excess” investment gains.
According to The Seattle Times, Boeing will deposit an amount equal to 10 percent of a Machinist’s gross wages into his or her retirement account the first two years of the contract, 6 percent the third year and 4 percent every year thereafter – no matching contribution required. This is in addition to the company’s longstanding contributions of up to 4 percent to Machinists’ existing 401k accounts.
Workers who manage their accounts with good advice may well come out better under the plan.
In the run-up to the vote, local union officials excoriated the new terms almost hysterically as a destruction of members’ retirement benefits. They tried to panic Machinists by suggesting that their existing pensions would be somehow be illegally raided to fatten executive compensation. Fortunately, most of the workers saw through the scare tactics.
Boeing must now make good on its promises to the Machinists – and to the Legislature, which extended existing tax breaks to keep the 777X here.
If the company plays its cards right, Friday’s vote will allow it to hit the reset button on its long-poisoned dealings with the union.
Company executives must build trust by not hunting for squirrelly little loopholes to outsource work that can reasonably be done in this region. Needless to say, it must honor expectations that wing construction and final aircraft assembly will happen here.
Boeing now has 10 years to get the relationship right. The clock started ticking Friday.