Boeing tells state leaders 777X wing plant is at risk
OLYMPIA, Washington (Reuters) - Boeing Co (BA.N) will not build the wing for its new 777X jetliner in Washington state if members of its largest union reject its latest contract offer in a Friday vote, company executives told Seattle-area elected officials on Monday.
But the company did not rule out locating final assembly of the plane or construction of its fuselage in the Puget Sound area if members of the 31,000-strong International Association of Machinists and Aerospace Workers District Lodge 751 turn down the proposal, three officials at the meeting said.
"They made it very clear that if there is a 'no' vote on the contract, they will not build the composite wing here," said Suzette Cooke, mayor of Kent, Washington. "It left the other parts of the plane in question."
The location of the final assembly and wing fabrication is in question because union members rejected Boeing's contract offer, prompting Boeing to look for other locations around the country, and prompting 22 bids from rival states.
The new 777X jet program, an updated version of Boeing's best-selling wide-body plane, represents a good slice of Washington state's aerospace future. Combined, the assembly line and wing factory would be worth thousands of jobs and billions of dollars to the region that lands them.
Japan has bid for the wing work, too, building on its experience making composite wings for Boeing's advanced 787 jet. Officials in Washington are concerned that without the wing factory, the state would fall behind in composite technology and would lose out in the future.
Boeing spokesman Doug Alder declined to confirm what company officials said at the closed-door meeting, but said by email that Friday's union contract vote will be the last chance for workers to weigh a Boeing offer before the airplane maker decides where to locate work on the new aircraft.
Snohomish County Executive John Lovick described the hour-long meeting with company officials, led by Boeing Commercial Airplanes Chief Executive Ray Conner, as "very positive" and said the company appeared genuine in its desire to build the 777X - the only jet it is likely to develop in the next 15 years - in Washington state.
"They weren't threatening us, just giving us information," Lovick said.
In November, machinist union members voted 2-to-1 against the company's initial contract offer.
The eight-year contract extension would have kept 777X production in Washington state. But in exchange, management wanted to replace the workers' pension plan with a 401(k)-style retirement savings account and raise their healthcare costs.
Boeing later made a revised offer that included a larger signing bonus and other concessions, and asked union leaders to endorse it. But the local union leaders refused to endorse it or put it up for a vote, saying the changes were insignificant.
National machinist union leaders, who have been more open than local union officials to making concessions in exchange for an extended contract, subsequently announced that the proposal would be put to a vote.
Construction of the 777X wing is particularly important because the technology in making it likely will be used in future Boeing aircraft. Boeing has proposed building a 1.2 million square-foot factory to house production of the 777X wing.
"The composite wing is the wave of the future," said Renton Mayor Denis Law. "It is one of the ways that aerospace can grow in this state."
Cooke said she was optimistic that union members would pass Boeing's eight-year contract extension proposal.
"It is such a sweet deal," she said, noting that under the proposal Boeing machinists would enjoy better pay and benefits than most other American manufacturing workers.