A Common Sense Result

From Tuesday's LA Times:

"SEATTLE — After battling for months with Boeing Co.'s leadership, the company's largest union approved an eight-year contract that trades hard-fought pension benefits for the right to build the 777X airliner — a bitterly fought concession that underscores unions' uphill battle at the bargaining table.

The contract approved late Friday was negotiated not with a bankrupt city or a struggling manufacturer, but with a company that delivered a record 648 planes last year and whose shares traded at all-time highs on the New York Stock Exchange.

It's part of a larger trend for labor unions, which face dramatic declines in membership strength, reduced bargaining power because of right-to-work states and hostile public opinion.

"The fact that Boeing is doing this is going to send a message to other companies — we can now put that on the table," said Leon Grunberg, a University of Puget Sound sociology professor who co-wrote "Turbulence: Boeing and the State of American Workers and Managers."

"Unions are in retreat and they are trying to slow the tide of concessions," he said. "It's a defensive battle to slow things down."

Boeing said the contract concessions were essential to compete financially with longtime European rival Airbus, which plans to deliver the first of its more fuel-efficient twin-aisle jetliners this year. The two companies are neck and neck in the large jet market, with each looking for even the smallest of financial gains over the other."

On December 10, I wrote a commentary on this called "Brown, Boeing and Unions" where I discussed that if California really wanted the Boeing contract, the state would need to urge its local unions to make concessions to help its residents get and keep jobs.

Meanwhile, Boeing understood it held  the upper hand in its negotiations with the unions in Washington state. The company used its leverage with right to work states to gain important concessions regarding pension contracts in order to keep jobs in-state. The biggest concession was that future employees would not be covered by a defined benefit plan. Instead, a contributory 401-k plan would be the pension plan of choice going forward.

Uhm... Bulletin to union employees... Most Americans are pensioned through 401-k's in their employer plans. Employers are not obligated to contribute, in most plans, in years where profits are non-existent. Welcome to the 21st century, folks.

Nevertheless, this was good news for Washington state. This project will begin in 2017 with the first complete plane coming off the line in 2020. Based on its production of the 787, the Company employees 7,100 men and women to build and install the rear fuselage. In South Carolina.

Boeing very much wanted to continue building the 777 in the Puget Sound region, where it has the most employees and more than a million square feet of manufacturing space. It is estimated that the 777X program would be responsible for 20,000 direct and indirect jobs.

Boeing was responsible for $70 billion of Washington's $76-billion aerospace industry in 2012.

While the union leadership wanted to force Boeing to continue its outdated, and frankly, costly pension plan, 51% of its common sense membership recognized that Boeing would continue to move its operations to states which were "right to work" states. Those workers would soon be hitting the bricks looking for work in a state geared to the airline building industry. They would be, instead, suffering like much of the rest of union-held jobs, where standing on the principles of union employment would not benefit them personally in their pockets.

So, congratulations to the employees of Boeing for exercising some basic common sense. And to the state of Washington, for its continual full employment, due to Boeing's successful negotiation.

And finally, congratulations to Boeing, first, for winning concession and not hurting current employees in the process, and second, for recognizing that its home IS Washington state and creating so many more jobs at home. 

And actually, thank you to all three entities for helping to keep the jobs here, in the United States. We all benefit from that.