Labor Union Potentially Kills Plan to Build Boeing Plane in Washington State

The door isn't shut on Boeing, but the next move is entirely up to the aerospace giant.

In a stunning move, the International Association of Machinists Union (IAM) District 751 last night soundly rejected an 8-year contract extension, calling it  "ridiculous." The 67-percent no vote came as the legislature passed a series of tax exemptions and other streamlining programs designed to ensure the new Boeing 777x project would be built in Everett. The new package was contingent upon the machinists ratifying the new contract.

Much of the 777 is already being built there, the new 777x project is likely the only "new" plane Boeing will develop over the next decade or two. Boeing already has numerous preliminary orders from various airlines.

According to the Yakima Herald Republic, the machinists rejected the extension because it included cuts in benefits, and changes to the retirement system.   Boeing says the changes were necessary to help the company meet the financial demands of developing the new aircraft. Union officials said calling it an "extension" was an insult.

The story is making international news. Reuters news service reported this morning that Boeing said its contract was an attempt to balance its desire to build the jet here and maintain what it called a competitive cost structure. Even though the 31,000 union workers potentially gave up their job with the vote, Reuters says the union felt the concessions were too great.

Part of the issue stems from Boeing's relocation of many projects to non-union South Carolina. The Everett Boeing machinists accused the company of trying to pay them non-union "South Carolina" wages.

Consider this: According to the Seattle Times in 2011, the average Boeing machinist makes about $59,000 annually, with another 20 percent for overtime, for a total of about $70,000. The company also has one of the best union-negotiated benefits plans and retirement programs.

Reuters reports as many as 31,000 jobs could eventually be jeopardized in the Seattle-Everett area, and it could cause some logistical and economic hurdles for Boeing to set up the 777x elsewhere. In the long run, it would pay off for them financially.

IAM Union spokespeople lashed out Thursday, saying politicians and others should not blame them for possibly losing the project.

Ray Conner, CEO of Boeing's Commercial Airplane Division, said Thursday the company was "not bluffing" in its message the 777x could be built elsewhere.

Starting today, Boeing officials are sending out staff to work with other states to find out what kind of offers are available. Tuesday, Governor Inslee told King 5 TV in Seattle, Boeing informed him they had been contacted months ago by 10 to 12 other states with lucrative offers to relocate the project.