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Missouri's out: Boeing machinists OK Washington state contract tied to 777X

Saturday, January 4, 2014 | 3:43 p.m. CST; updated 11:10 p.m. CST, Saturday, January 4, 2014

SEATTLE — The stakes were high and the vote was close as Boeing production workers agreed to concede some benefits in order to secure assembly of the new 777X airplane for the Puget Sound region.

Washington Gov. Jay Inslee and Boeing hailed Friday's vote, which proponents said solidifies the aerospace giant's presence in the Seattle area.

"Tonight, Washington state secured its future as the aerospace capital of the world," Inslee declared.

Under the terms of the eight-year contract extension, Boeing said the 777X and its composite wing will be built in the Puget Sound area by Boeing employees represented by the Machinists union.

"Thanks to this vote by our employees, the future of Boeing in the Puget Sound region has never looked brighter," Boeing Commercial Airplanes President and CEO Ray Conner said. "We're proud to say that together, we'll build the world's next great airplane — the 777X and its new wing — right here. This will put our workforce on the cutting edge of composite technology, while sustaining thousands of local jobs for years to come."

Local officials of the International Association of Machinists and Aerospace Workers had urged their 30,000 members to oppose the deal, arguing that the proposal surrendered too much at a time of company profitability. They had opposed taking a vote at all but were overruled by national leaders in the Machinists union.

The announcement that the contract had passed with a 51 percent yes vote was somber.

"Our members have spoken and having said that, this is the course we'll take," Jim Bearden, administrative assistant for Machinists District 751, said in announcing the results. "No member liked this vote or the position we were put in by the company, nor was it an easy vote for anyone to cast."'

Opponents of the contract opposed the idea of freezing the Machinists' pensions and moving workers to a defined-contribution savings plan.

The issue fractured the union and drew unusual pleas from politicians who said the deal was necessary to support the area's economic future. Boeing has been exploring the prospect of building the 777X elsewhere, including Missouri, whose legislature last month passed a plan in offering up to $1.7 billion in incentives over more than two decades if Boeing agreed to assemble the highly sought-after passenger plane in the St. Louis area.

Gov. Jay Nixon said the incentive package Missouri offered Boeing showed the state is "ready to compete" in the global economy. His statement came early Saturday morning, just after the Boeing announcement.

Nixon thanked the General Assembly, community colleges and local business and labor partners for the "nationally-recognized proposal."

He also said that Boeing's decision last month to shift some research positions to Missouri is "proof positive" that the state is a "top destination for high-tech jobs and investment."

Employee reaction

"We missed it by 1 percent because people were confused and worried about their jobs," said Rick Herrmann, who has been working at Boeing for 46 years.

Hazel Powers and Dena Bartman lingered at the Seattle union hall after the results were announced, their eyes swollen from crying. Powers described a solemn mood after the announcement.

"Shocked. Disbelief," she said.

"I'm still just numb," Bartman said.

Powers has worked for Boeing for almost 35 years, while Bartman has been there for 25 years. Her 25-year-old daughter has worked at the aerospace giant for seven years.

"I think people that voted for it were scared," Powers said. "The pressure from the politicians and the community — people are scared about not having good-paying Boeing jobs."

Bob Dennis, an inspector at Boeing for six years, said earlier in the day he was voting for the contract because it represented the best chance to keep the 777X jobs in Washington state.

"I don't think Boeing had to come back to the table. We forced them that way. But at the same time, I think this is our last opportunity to keep those jobs in the state," he said.

"The tough vote taken by the Machinists today means the 777X will be built in the only place it should be, by the only people prepared to deliver," said U.S. Sen. Patty Murray, D-Wash.

"I know well this decision wasn't easy for any of the Machinists or their families, and I know that many of those men and women decided Boeing's latest offer was still unacceptable," Murray added. "Their concerns about income and retirement security for current and future generations of aerospace workers — and all American workers — are legitimate."

Bearden, speaking in place of District 751 President Tom Wroblewski, who has been ill, said Boeing production workers "faced tremendous pressure from every source imaginable." He took a dig at "the politicians and the media, and others, who truly didn't have a right to get into our businesses, were aligned against us and did their best to influence our folks' votes."

Machinists International President Tom Buffenbarger, who forced the issue to a vote over the objections of local union leaders, said in a statement that "the impact of this agreement extends far beyond IAM members who voted today.

"For decades to come, the entire region will benefit from the economic activity and technological innovations that will accompany" the jet production.

New agreement

Washington state has always been the most natural place for Boeing Co. to build the 777X, since most of the company's production is still done in the Puget Sound area. Chicago-based Boeing offered to keep the 777X in the region but sought two big deals: An extension of tax breaks all the way to 2040 and a new contract with the Machinists union that would transition workers away from traditional pensions.

In November, state lawmakers swiftly approved the tax benefits — valued at some $9 billion — but the Machinists rejected a proposed contract shortly afterward. After the initial contract rejection, Boeing immediately began soliciting bids from other states. The company said it received submissions for 54 locations in 22 states.

The competition has underscored Boeing's commanding bargaining position in an economy where top-notch manufacturing jobs remain scarce and elected officials feel obligated to aggressively pursue such opportunities.

Boeing improved its offer after the last vote by machinists. An initial plan to slow the rate that workers move up the pay scale was tossed while the company also offered $5,000 in additional bonus money and improved dental coverage.

In addition to the pension issue, opponents decried increased health care expenses and slower wage growth. However, some machinists will likely see their base salaries rise above $100,000 under the new agreement.

Boeing began offering the 777X in May, and company officials have said they needed to move swiftly to decide where the plane will be built.

The company recently received orders for 225 new 777X planes from three airlines at the Dubai Airshow.

Boeing has said the 777X is expected to carry as many as 400 passengers and be more fuel efficient than the current 777.


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Comments

Mark Foecking January 4, 2014 | 4:19 a.m.

I think it's pretty obvious Boeing really didn't want to move. They just wanted to force the union's hand. Face it, the union doesn't create the jobs.

DK

(Report Comment)
Michael Williams January 4, 2014 | 8:46 a.m.

MarkF: I think you're right....Boeing didn't want to move.

However, I also think they WOULD have moved if forced in that direction.

Now I worry more about a bunch of PO'ed machinists putting together the next airplane I ride on.

(Report Comment)
Ellis Smith January 4, 2014 | 11:33 a.m.

Mark & Michael:

I agree with both of you. There will no doubt be many negative comments about Boeing's motives, but what residents of both Missouri (St. Louis area) and Kansas (Wichita) need to remember is that Boeing CONTINUES to have a presence in both states, with jobs that pay well.

The bargaining tactics used by Boeing and the union (national and local) were entirely normal. Should anyone think differently, I can only assume the person or persons has/have no experience with hard-nosed collective bargaining. If you think this union is tough, try bargaining with the United Mine Workers of America or the United Steelworkers of America. :)

As I've said previously, Boeing's decision to set up (additional) shop in Washington state will have NO negative effect on the significant number of MS&T engineering graduates Boeing hires, and they may now hire more of them. Said engineers just may not be living in Missouri and paying Missouri taxes.

Michael, I believe it will be at least STATISTICALLY safe to board the planes. Rumor has it that the next major crash will involve something made by Airbus. :)

(Report Comment)
Ellis Smith January 4, 2014 | 11:59 a.m.

PS:

I've seen maneuverings such as this between major corporations (or even groups of corporations with industry-wide bargaining) and major unions going back to the 1950s. As we might expect, a certain amount of posturing and "blowing smoke" tends to occur in the process. That's both expected and understood.

But for all that I don't think any corporate or union rep has ever said, televised, and in answer to a direct question, "You can keep your present health plan (or physician) if you want."

(Report Comment)
Michael Williams January 4, 2014 | 5:35 p.m.

Ellis: My comment about PO'ed machinists was tongue-in-cheek. After all, those folks' and their relatives fly, too, and have as much vested interest in arriving safely as the pilot.

My dad worked for a steel corporation in KCMO....at the end, he was general foreman of a nail mill but was a union member before promotion to mid-management. He hated the union. During one strike, I still remember mom and him taking the sofa apart to find enuf money for gasoline so he could get around on his "temporary" work selling World Book Encyclopedias. His "second" temporary job was at a gasoline station....at nights. I didn't see him much during those long weeks...and months.

My opinion of unions was formed long ago. It's not a favorable opinion.

(Report Comment)
Ellis Smith January 5, 2014 | 10:00 a.m.

Michael:

I took your comment as you intended it.

My father was staunchly anti-union; I am generally not pro-union, but I make TWO exceptions: United Mine Workers of America and United Steel Workers of America. Mining, and pouring liquid steel (or other hot liquid metals) are inherently dangerous and often physically miserable occupations. Further, both are often carried out on a 24-hour basis (if busines warrants that), meaning shift work.

Some academics, I've noted, carry on as if they have it tough. I suppose it's all that "psychic" pressure. I'd like to see them on a pouring platform next to a transfer ladle full of molten steel, at 3 AM on a Sunday morning. As a more exciting alternative, being present in what's called a continuous (steel) casting shop when a vertical breakout of viscous liquid steel happens.

(Report Comment)
Michael Williams January 5, 2014 | 12:05 p.m.

Ellis: During summer months in college, I worked in the same steel mill as my dad. I worked in the wire bundling dept, chemistry lab analyzing electric furnace steel, as a general laborer shoveling tons of steel dust beneath rollers (ugh!), but the most exciting was the rolling mill where hot billets were turned into rod. For the latter, my main job was cutting the ends of coiled rod (hanging from massive hooks) since the ends were hollow from the rolling process. Gosh, that was a HOT job....30 minutes on, 15 minutes off. Our gloves (which we had to purchase) lasted only one day and we had to individually tape each finger to get that kind of longeivity. Even so, I got burned.....a LOT!

The excitement came towards the end of the roll-line when the rod was moving at a pretty good clip, but one roller would get jammed and the following rod (still coming strong) would curl up in a heartbeat to about 50' high. Since the rod was quite hot, it was plastic and would be subject to this thing called "gravity" and make it's way back to the mill floor. Heaven help the guy not paying attention.

You had to stay awake. No sleeping on the job in THAT mill.

PS: The union guys did NOT like us summer employees....another reason my sympathies do not rest with them.

(Report Comment)
Michael Williams January 5, 2014 | 12:14 p.m.

Ellis: The best job was the chemistry lab working the 12-8 night shift. Usually, 3 of the 4 electric furnaces were down for maintenence, so the lab had little to do. On such occasions, the large hot plates in the lab were used to concoct a rather nice breakfast of bacon, eggs, and pancakes.

Yes, we indeed cooked and ate IN THE LAB.

Didn't affect me much, however. Didn't affect me much, however. Didn't affect me much, however. Didn't affect me much, however.

PS: Almost got fired from that chemistry job. During one long night when there was nothing else to do, this young, budding chemist wondered if he could turn silver nitrate into metallic silver. After much effort and 1 kg of silver nitrate later, this budding chemist decided that...indeed...he could. Someone ratted me out, and I found out about it, so one abject apology to my foreman later saved my job. I offered to give back the silver bar, but the foreman said, "Keep it as a reminder of what you are supposed to be doing on the job."

And, I still have it, right here on my desk. It was a good "reminder" for many, many years.

I cared about the job....but I mainly cared my dad not find out.

(Report Comment)
Ellis Smith January 5, 2014 | 3:06 p.m.

[Some of what I am about to say is for others, should they read this; you probably know most of it.]

Steel is melted in batches, using either electric arc furnaces or basic oxygen furnaces (BOF accounts for the largest amount of steel made today). The molten steel arrives in a transfer ladle. Traditionally, the steel has been poured into ingot molds and allowed to solidify, then the stripped ingots are heated for hot working. The lion's share of steel is still processed that way, but while this method is good for processing large amounts of steel it has three disadvantages: cooling the steel in the molds and then having to reheat it to working temperatures is thermally inefficient; more refractory ceramics (cost of) are involved; because the rate of cooling (in the ingot molds) is relatively slow, differences in grain structure of the solidified steel are greater than if the cooling were faster.

An alternate modern scenario is continuous casting of steel. Molten steel in the transfer ladle is fed to a device called a "tundish," which in turn feeds parallel streams vertically into a water-cooled casting machine. The parallel "strands" exit the caster WITH ONLY THE OUTSIDE SURFACES IN A SLIGHTLY PLIABLE SOLID STATE. Breakouts of the still liquid cores are possible!

The strands continue to move vertically, but at a are slowly "bent" through 90 degrees to horizontal. Cutting torches move at the same speed as the strands, to cut for length, and the still very hot product can then either go straight to further hot processing or be allowed to cool for storage and futher use. Because the formed cross-sections (out of the caster) are relatively small and cooling is relatively rapid, the metallurgical cross-section is very uniform.

The (economic) tendency is to use the traditional method (ingot pouring) for production of larger quantities of less critical grades of steel, and continuous casting for lesser quantities of more expensive grades of steel.

NOTE: Ingot pouring is a batch process, whereas continuous casting is a continuous process, meaning that there has to be a continuous supply of metal going to the casting machine (or you shut down and must begin again later).

I have more than passing familiarity with both processes, as an observer. My only summer experience with steel was with Pittsburgh-Des Moines, a steel fabricator. PDM's most famous job was erection of the Arch in St. Louis.
I worked in fabrication, not erection, and yes I learned quite a bit that summer about the union.

Example of ceramics used in ingot pouring. Steel shrinks upon cooling, so how can you pour an ingot that on cooling will be entirely full? Answer: You mount a metal device with a refractory ceramic interior on top of the ingot mold, so you have room to pour more hot steel. Then, if you want, you can place a refractory ceramic "lid" on top of that (after filling the assembly with poured steel) to control cooling.

(Report Comment)
Michael Williams January 5, 2014 | 3:37 p.m.

I don't remember when ARMCO switched to continuous casting, but it was after I was long gone.

I thought the whole process was quite exciting.....from the extraordinarily loud bangs when carbon electrodes were put into the furnaces, to the ladle pouring, ingots, rolling mill, billets, rod mill, wire mill, nail mill....all loud and all dirty and all surrounded by acres and acres of wild ditchweed maryjane in the bottoms of KCMO.

(Report Comment)
Ellis Smith January 5, 2014 | 9:01 p.m.

The more exciting aspects are watching a "blow," when, after insertion of the water-cooled lance, oxygen enters the basic oxygen furnace; the mess at a pouring platform if the (refractory ceramic) stopper assembly on the bottom of the transfer ladle jams in the open or partly open position (you can't shut off the flow of steel from the ladle as you fill one ingot mold and move to the next one); or if there's a breakout of liquid steel from a continuously cast strand after it exits below the casting machine. The last two are dangerous. In the case of a leaking ladle, a good gantry crane operater can manage to reposition the ladle above the next mold with minimal spillage.

PS: The last refractory ceramic ladle stopper plates I was associated with were made in China. They worked well, and at lower cost than those made here.

(Report Comment)

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