SEATTLE/NEW YORK (Reuters) - Some 31,000 Boeing machinists vote on Friday on a crucial labor contract that affects the location of thousands of jobs and billions of dollars of economic activity.
If the workers accept the deal, Boeing Co (BA.N) would build its new 777X jetliner and wings in the Seattle area, where Boeing has built aircraft for more than 90 years.
If they reject it, Boeing says it will make the wings and possibly the whole plane, elsewhere, marking a major employment and economic loss for Washington state.
Boeing says it has received offers from 22 states interested in hosting a new factory to build the successor to its popular 777 widebody jet.
The vote has opened deep rifts between the local International Association of Machinists and Aerospace Workers (IAM), which opposes the contract, and its Washington leadership, which forced a vote on the proposal. It has also revealed cleavages between younger workers open to the deal and older workers dead set against it.
In November, two-thirds of machinists voted against a similar offer that would have replaced their traditional defined-benefit pension with a 401(k)-style savings plan, one of two retirement plans the workers receive.
The union’s national leadership negotiated that deal, which would have extended the contract eight years beyond its current expiration in 2016. But local leaders opposed it, saying the take-aways were too great.
Now, the same dynamic is playing out again. Boeing has sweetened the offer with a larger signing bonus and other changes. But the deal still eliminates the pension, and local union leaders have urged members to reject it.
“You need to look at the facts of the economic destruction you would live under for the next 11 years,” local leaders said in a letter to members.
The national leaders say the new offer is $1 billion better than the prior one.
“The membership deserves the final say,” said R. Thomas Buffenbarger, president of the IAM International, which also has members in Canada.
The issue has drawn wide attention as other states bid to win thousands of well-paid jobs and because of the tactics Boeing has used to bargain with its union.
Even noted consumer advocate Ralph Nader has weighed in, calling Boeing’s tough stance “unseemly,” given Chief Executive Jim McNerney’s $21 million pay package.
“A book could be written about the Boeing company’s strategy for externalization of a variety of its costs onto innocent, defenseless people - whether workers or taxpayers,” Nader wrote.
Beside the pension loss, local union leaders say the language of Boeing’s offer does not ensure that machinists will get the work, because it reserves Boeing’s right to use lower paid contractors.
“I’m very, very skeptical of what Boeing is saying to us,” Lester Mullen, a local District 751 council delegate, said on Thursday from the shop floor where he builds Boeing’s 777 wings in Everett, Washington.
Even if workers approve the contract and Boeing builds the 777X in Washington, Boeing could outsource the work to a vendor.
“It doesn’t mean we’re getting the work. It just means it’s going to be built here,” he added.
Boeing responded this week by saying that it will establish its base for making the 777X’s carbon-composite wings in the Puget Sound area, which includes Seattle.
“This work will be performed by the mechanics who currently build aluminum wings here in Puget Sound,” Alan May, vice president of human resources at Boeing Commercial Airplanes, said in a letter sent to 777 workers.
On Thursday, it issued a further statement saying “current mechanics will have the opportunity to be trained for this new composite work” and noting that it would make its 737 MAX jet in the area, and do KC-46 aerial refueling jet and P-8 submarine killer jet production work, “in the Puget Sound and Portland through 2024.”
The company declined to comment on Nader’s letter to McNerney.
The divide between the local leaders and their national counterparts is mirrored by divisions over the contract that appear to cleave along age lines.
Younger machinists have voiced strong concern that failing to vote for the contract would cost them their jobs as Boeing moves the work elsewhere. The 777X is the last major development on Boeing’s books for the next 15 years. If the plane is built elsewhere, it would slowly erode aerospace jobs in Washington, they fear. The average wages is $29 an hour.
Many older workers, however, have said the pension is sacred and is worth risking job loss.
“There’s plenty of aviation work in the world,” said Kevin Flynn, an aviation maintenance technician inspector, who has filed a complaint against the national union leaders with the National Labor Relations Board for holding the vote against the wishes of a majority of members.
“I’ll just have to move to where the work is.”
The union says 49 percent of machinists are 50 or older, and under the new contract could take their full pensions starting at age 58. Workers 50 and over who want to protect their pensions could potentially sway the vote on Friday. The average age of the Seattle IAM local’s members is 46.
For the machinists, the age dispute erupted at a rally last month.
“Retire and go away!” a young woman shouted at an older worker, saying her family had worked at the company for three generations. A sign attached to her child’s stroller said: “This vote affects the smallest IAM members, too!”
The older, gray-haired worker shouted back: “Why do you want to sell your pension out?”
If past votes are a guide, the pension might not be the only key issue. Last year, Boeing’s unionized engineers narrowly approved a less drastic pension change that halted the pension for new hires.
Friday’s vote also might have relatively low turnout because it comes just after Boeing’s airplane factories reopened after their customary closure between the Christmas and New Year’s holidays.
Since many workers might still be on vacation, the union is allowing them to log on and vote electronically.
Paper ballots will be counted at five union halls around the Seattle area and results phoned to local District 751 President Tom Wroblewski, who will announce them.
The final tally is expected around 9 pm Pacific Time (0500 GMT Saturday).
Reporting By Alwyn Scott. Editing by Andre Grenon