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Unions, politicians unhappy with Boeing's decision on S. Carolina

Politicians and Boeing's unions reacted strongly -- sometimes bitterly -- late Wednesday to Boeing's announcement that the company had picked South Carolina over Everett for a second production line for the 787 Dreamliner.

To Boeing, the decision was one -- with the attraction of lower wages, a big state incentive and a non-union environment -- that made good sense for the company and its future.

"Establishing a second 787 assembly line in Charleston will expand our production capability to meet the market demand for the airplane," said Jim Albaugh, the new president of Boeing's commercial airplane operation.

But unions, particularly the Machinists union, with which Boeing has been at odds frequently over the last two decades, claimed the company had already made up its mind before negotiations began over the critical issue of labor peace in the Puget Sound area.

"It was obvious to me that Boeing wasn't really interested in working with us. They didn't take our proposals seriously and they never offered any proposals of their own. Most of the time, they didn't even take notes," Tom Wroblewski, head of the Machinists' District 751, said at a news conference.

Rep. Adam Smith, D-Tacoma, said he hoped Wednesday's announcement didn't "represent a larger shift in the company's approach to doing business.

"Throughout the years, Washington state and its workers have provided Boeing with the incentives, support and high quality workers that have allowed it to become one of the world's leading aerospace companies. Given this history and all that Washington state has to offer, it is extremely disappointing to see them push aside our workers and develop the second plant outside the state."

South Carolina wooed the company with a $450 million incentive package, which hinges on Boeing creating 3,800 jobs there. Construction will begin next week. The company already had secured building permits and will begin clearing land.

The decision comes as Boeing is struggling to get its 787 off the ground. The plane -- which has more than 840 orders from 55 airlines -- is more than two years behind schedule.

Washington lawmakers and the unions representing Boeing workers tried up until Wednesday morning to persuade the company to open the second line in Everett, which would have increased the number of aerospace workers in the state. The decision won't cost jobs in Washington -- at least for now.

Sen. Patty Murray, D-Wash., unsuccessfully tried to orchestrate an 11th-hour meeting between the company and the Machinists to salvage a new agreement, but the company cast its lot with the site in North Charleston, S.C.

Boeing had sought no-strike concessions from the Machinists as part of the consideration for putting the second line in Everett, where the first production line for the Dreamliner is located.

But despite negotiations between the union and the company last week, the two sides were unable to reach an agreement. South Carolina is a right-to-work state where establishing a union is more difficult. The company has been the subject of multiple strikes in the last two decades at its production facilities in the Puget Sound area.

In addition to the nonunion environment, Boeing will find wages lower in South Carolina, where assembly line workers make $14 an hour versus $26 in the Puget Sound area.

"This decision allows us to continue building the synergies we have established in South Carolina with Boeing Charleston and Global Aeronautica," Albaugh said.

The Machinists union was blunt in its criticism of the company.

"Boeing has betrayed our loyalty once again, walking away from our discussions just like they walked away from Seattle eight years ago to move to Chicago," Wroblewski said.

"We tried very hard to reach an extended agreement with Boeing. We listened closely to what executives said, and suggested ideas to meet their needs. We offered concrete, real-world solutions," he said.

"But I can tell you now, no matter what Boeing says or implies, the truth is this: We did offer Boeing a 10-year contract, and even offered to go longer than that. And when we did, they seemed stunned, and stopped talking."

Boeing spokesman Tim Healy said the company made it clear to union negotiators what it required in any extended agreement.

The company, he said, wanted an agreement through at least 2022, and it wanted wage increases in line with historic wage improvements over the last two decades.

The company said it told the union it would consider an arrangement in which bargaining would happen as it does now, with membership voting on the company's best and final offer. If members rejected that offer, the matter would go to binding arbitration.

Boeing's decision on the South Carolina plant comes as Rep. Norm Dicks, D-Belfair, Murray and Washington state's other senator, Democrat Maria Cantwell, are backing the company's bid for a contract to build new Air Force refueling tankers. The contract could be worth $100 billion.

The Air Force is expected to release its formal request for bids by the end of November.

Asked why she thought the state's congressional delegation should continue to fight for Boeing in light of Wednesday's announcement, Murray said "that's a good question."

But she quickly added, "I work for the 80,000 people who get up every morning in Washington state to build airplanes. I have people on the line every day that I am fighting for."

Murray said CEO Jim McNerney had made clear in their conversations that what Boeing most wanted was "certainty" from its work force. The senator said she thought the union's latest offer was "impressive" and called Boeing's decision "shortsighted."

"We are where we are," Murray said in an interview.

Rep. Rick Larsen, D-Everett, said "it is crystal clear that no level of tax breaks or training or anything else was going to stop this from going to South Carolina. It seems the management-labor divide was too wide to bridge. We did everything we could."

Cantwell said Albaugh told her the decision to put the second line in South Carolina won't result in the loss of any Washington state jobs. She said Boeing's relationship with the Machinists had to be a major factor.

For Washington, the biggest potential impact may be long term. Boeing in the next decade is expected to create new planes to replace the 777 and the single-aisle 737. The 737 is built in Renton. The 777 is assembled in Everett.

The decision to opt for a site in the South could set a pattern for where those new planes would be built.Albaugh told Boeing employees in a message that the decision will make the company more competitive. Boeing is still dedicated to its Puget Sound workers, he said.

"I know this decision may be of concern to some in Puget Sound, and I ask everyone to focus on the larger picture," wrote Albaugh.

"We are adding jobs in South Carolina, not taking them away from Puget Sound -- which is and will continue to be -- our center for design, flight test and manufacturing. We have exciting programs to work on here, including the majority of the production for the 787, and we see increased production rates in the future across all programs in Puget Sound."

Local economist Dick Conway, who has studied Boeing's impact on the regional economy for decades, estimates that each Boeing job generates spending that supports 1.7 other local jobs -- one of the highest "multipliers" of any private-sector employer.

That means every job that Boeing creates in South Carolina represents as many as three jobs that won't be created in Washington.

Until the South Carolina plant is up and running, Boeing will establish what it calls "surge capability" to build the next version of the 787, the 787-9, in Everett.

The 787-9 is a somewhat larger version of the basic Dreamliner, the 787-8.

When the South Carolina plant is ready, 787-9 assembly and testing will happen there, and the 787-9 facility will be closed in Everett.

The assembly line for the 787-8 will remain open in Everett.

Boeing is opening its second production line for the 787 because of unprecedented demand for the jetliner.

The company had hoped to assemble each jetliner in just three days in Everett, but glitches in supplier production of component parts have made the assembly move much more slowly.

Boeing bought Vought Aerospace's Charleston factory that built 787 fuselage sections after that company botched its efforts to build the sections on time and in fully completed form.

The company also bought a half interest in a Charleston plant built by Vought and Alenia of Italy to join the fuselage parts built by Vought in Charleston and sections built in Italy by Alenia.

The company has already secured building permits to clear a forest near the existing plant to construct the assembly plant.



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