UPDATE 1-Boeing machinists union ratifies labor pact

Thu Dec 8, 2011 2:04am EST

* Members of Boeing's biggest ratify contract

* Four-year deal approved by 74 pct of the vote

* IAM agrees to drop complaint in NLRB case

By Kyle Peterson

Dec 7 (Reuters) - Boeing Co's biggest labor union on Wednesday ratified a four-year contract extension, ensuring the upcoming version of the planemaker's best-selling 737 narrowbody will be built in Washington state and likely ending Boeing's high-profile dispute with the National Labor Relations Board.

The International Association of Machinists (IAM) said 74 percent of the vote was in favor of the deal. About 31,000 members were eligible to vote.

"Today our members cast their vote for jobs, for their futures, for the future of this community and for the future of Washington state," said Tom Wroblewski, president of IAM District 751, in a press conference announcing the results.

The deal gives Boeing some assurance that strikes will not disrupt its operations as it ramps up production of many of its models. For the union members in Washington, ratification also means local jobs for which it has campaigned. A tentative deal was reached last week, nine months before the expiration of the current contract.

"Job security was the key to this negotiation," Wroblewski said.

Boeing's contract extension, which would take effect immediately if ratified and run through September 2016, includes annual wage increases of 2 percent, a plan for bonuses between 2 percent and 4 percent each year and a $5,000 ratification bonus for each worker. It also preserves defined benefit pensions, now a rarity in corporate America.

Boeing has said that if the contract is ratified, it will build the new 737 MAX at its Renton, Washington, plant. Narrow-body jets are the short-haul workhorse for the global airline industry.

The 737 MAX will feature a new, more fuel-efficient engine on its existing 737 body. Due to enter service in 2017, Boeing says it has already taken more than 700 provisional orders.

The aircraft will compete with rival Airbus' revamped A320neo single-aisle, due out in 2015. Airbus has more than 1,000 orders for the plane.

Boeing is the world's second-largest commercial planemaker behind Europe's Airbus.

Jim Albaugh, chief executive of Boeing Commercial Airplanes, said in a phone interview with Reuters that having the contract in place relieves Boeing of "the distraction of negotiating another contract" as it increases production rates throughout its operation.

He said ratification ushers in an era of more positive relations between Boeing and its unions. But he said the company and its labor groups have long demonstrated an ability to work together.

"To say we haven't worked well with our unions over the last couple of years would be a stretch," Albaugh said. He noted key milestones for the company, including first delivery of the long-delayed, but hot-selling 787 Dreamliner.

That light-weight, carbon-composite aircraft was three years behind its development schedule, partly because of a 2008 labor strike and kinks in the extensive global supply chain. The first 787 was delivered this year.

The IAM has had four strikes in the last 22 years, most recently the 58-day stoppage in 2008 that delayed the already-late 787. The company has lost more than 200 production days to strikes over the past two decades.

POSSIBLE END TO NLRB COMPLAINT

The IAM has said previously that if the contract won member approval, it would drop its complaint against Boeing over its new 787 production site in South Carolina, the subject of the dispute between Boeing and the NLRB.

By dropping the complaint, the IAM may also defuse an ongoing battle between the NLRB and Boeing.

IAM and the NLRB have accused Boeing of putting its second 787 assembly line in South Carolina, a state unfriendly to labor unions, as punishment for past strikes, which are a protected activity. Boeing traditionally assembles its wide-body commercial planes in Everett, Washington.

Boeing has fought back, saying the location of its new plant, which opened this year, was purely a business decision based on costs and resources. But the conflict has spurred a broader debate between politicians who support organized labor and those who believe business should be free to build factories where they want, for whatever reasons they choose.

The NLRB is a government agency that is independent but dominated by Democrats. Republicans frequently cite the Boeing/NLRB dispute to denounce Democrats' records on job creation.

Boeing shares closed down 27 cents at $70.60 on the New York Stock Exchange.

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