Boeing Reviewing 54 Sites for 777X After Union Talks Fail

Boeing Co. (BA) is reviewing 54 sites in 22 states to build its 777X aircraft after union chiefs balked at contract concessions and said rank-and-file members wouldn’t vote on the company’s latest terms.

Washington Governor Jay Inslee, trying to keep work on the jet in Boeing’s Seattle commercial hub, urged a Machinists local yesterday to allow balloting on the givebacks. Leaders at the Machinists’ District 751 turned down Boeing’s offer on Nov. 12, saying it was little changed from a plan rejected last month.

A possible second vote hinges on a technicality: whether Boeing’s latest proposal is still on the table or has been withdrawn, said Frank Larkin, a spokesman for the international union. Last month, union members rejected Boeing’s demands for concessions in exchange for keeping assembly of the 777X, the company’s first jet for the 2020s, in the Puget Sound region.

“We’ve heard from some rank-and-file members and from leadership of the international that the agreement that emerged deserves a vote,” Inslee, a Democrat, said in a statement. “That should happen soon as I have become increasingly concerned that we are at a perilous point in our effort to bring the 777X to Washington state.”

Photographer: Mike Kane/Bloomberg

A nearly completed Boeing Co. 777 reaches the end of a moving production line at the company's facility in Everett, Washington. Close

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Photographer: Mike Kane/Bloomberg

A nearly completed Boeing Co. 777 reaches the end of a moving production line at the company's facility in Everett, Washington.

With talks concluded, Chicago-based Boeing is shifting focus to proposals from states vying to host assembly of the 777X, carbon-fiber wing and other parts, said Doug Alder, a spokesman. With the exception of some 787 Dreamliners in South Carolina, Boeing builds all its commercial planes near Seattle.

Multiple Locations

Many states submitted multiple locations for consideration, tempted by the prospect of attracting thousands of aerospace jobs. Boeing plans to move quickly to winnow the list, making a decision on a 777 venue early next year, Alder said in a telephone interview.

Boeing had promised to keep the 777X assembly and its composite wing in Washington in exchange for freezing pensions in 2016 and shifting employees to a 401(k)-like retirement program. Its latest proposal, a response to a Dec. 11 union offer, dropped an earlier demand slowing the rate at which workers advance to the top of the pay scale to 13 years from the current rate of six years.

“We’ve listened to the union leadership and had an open dialogue in hopes of moving toward each other,” Ray Conner, chief executive officer of Boeing’s commercial aircraft unit, said in an e-mailed statement. “Unfortunately the offer, which would have ensured this great airplane for the Puget Sound region, was immediately rejected by the union leadership.”

Not Enough

Machinists couldn’t accept the planemaker’s offer because sweeteners like added $5,000 bonuses per member and better dental benefits “are not nearly enough to offset the things Boeing was trying to take away from you, and for the Machinists who will join us in the future,” said District 751 President Tom Wroblewski.

Wroblewski said “several hundred” of the union’s 30,000 members at Boeing e-mailed him overnight to ask why they couldn’t vote on the company offer.

“The answer is simple: There is no offer to vote” since Boeing withdrew its counterproposal “immediately,” he said in a statement on the Machinists’ website.

Boeing’s Alder responded in an e-mail that “Boeing did not withdraw its counterproposal, nor was there any need to do so, because the counterproposal was rejected.”

Members “have been letting us know in large numbers how they feel about voting on the proposal, how they feel about its merits,” Larkin, of the international union, said in a phone interview. “The strong feeling is they have a right to vote.”

Stock Rally

Boeing rose 0.7 percent to $133.83 yesterday at the close in New York. The shares surged 78 percent this year, the biggest advance among the 30 stocks in the Dow Jones Industrial Average.

Labor relations, which were chilled after Machinists overwhelmingly rejected 777X-related concessions demanded by Boeing last month, seemingly thawed this week as the company fielded proposals from California to North Carolina offering billions of dollars in incentives to land jet manufacturing that would create thousands of jobs.

Conner met with Wroblewski on Dec. 10, the day that state bids were due, and the union followed up with proposed changes to the contract expiring in 2016. Two-thirds of members voted on Nov. 13 to reject an eight-year extension proposed by Boeing that would have frozen pension plans and slowed how quickly workers advance to maximum hourly wages.

While the union didn’t divulge details of this week’s offer, Wroblewski described it as meeting “the needs of our members, while also ensuring the long-term success of the Boeing Co. in Washington state,” according to a Dec. 11 statement.

Boeing said union leadership rejected its “best and final counterproposal,” which included $15,000 in bonuses per member.

To contact the reporter on this story: Julie Johnsson in Chicago at jjohnsson@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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