November 14, 2013

Machinists reject Boeing deal; local officials consider making pitch for 777X work

Members of the Machinists union at Boeing Wichita voted along with their Puget Sound brethren to reject Boeing’s offer of a contract extension.

Members of the Machinists union at Boeing Wichita voted along with their Puget Sound colleagues to reject Boeing’s offer of a contract extension that would have locked in 777X work in Washington state.

Employees represented by the Machinists at Boeing in Wichita work under the same master agreement as those in Puget Sound.

It was the first time, however, that Wichita union officials have been left out of contract negotiations, said Frank Molina, directing business representative for the Machinists District 70.

Boeing plans to close its Wichita facility next year. It’s been working to move programs to Oklahoma City, San Antonio and Seattle. But the Machinists union still represents 230 Boeing Wichita hourly employees. More than 95 percent of them are union members. About 50 of them will be moving to Puget Sound at some point, Molina said.

Despite the pending closure, many Wichita Machinists did not like the contract, which included reductions in benefits for workers.

“This thing is going to take away from the people who are going to work for this company in the future,” said a 39-year Boeing Wichita flight mechanic who did not want to give his name.

He voted to reject it.

The eight-year contract extension would have cut many of the benefits dealing with health insurance and retirement plans for which Machinists had earlier gone on strike, union members said.

The future for Wichita is predetermined, Molina said. So there wasn’t much in the contract that would have affected the Wichita unit.

Those moving from Wichita to Puget Sound would have gotten Boeing’s offer of a $10,000 signing bonus in their move. Those remaining in Wichita, however, would not have received the bonus.

Contract or not, “the feeling is Wichita is forgotten completely,” Molina said.

Still, “they do have a loyalty of what they fought for” over the years, he said.

With the contract rejected, Boeing has said it will now look outside Washington state for places to put 777X work.

“Without the terms of this contract extension, we’re left with no choice but to open the process competitively and pursue all options for the 777X,” Ray Conner, Boeing Commercial Airplanes CEO said in a statement.

Among the top sites Boeing is considering, according to a Seattle Times report that relied on unnamed sources, are Long Beach, Calif., Salt Lake City and Huntsville, Ala.

Greater Wichita Economic Development Coalition officials met Thursday morning to discuss going after the 777X work for Boeing’s facility in Wichita Boeing.

“The advent of the union’s vote and apparent commitment by Boeing to seek alternative locations gives us an opportunity,” said Tim Chase, president and CEO of the GWEDC.

It would be premature, however, to say there is a well thought-out plan at this time, Chase said. “But we’re working rapidly in that direction,” he said.

However, one negative factor for Boeing may be that Wichita’s hourly work force are under the same master contract as union members in Puget Sound, he said.

The vacant hangar space in Wichita has some flexibility to be converted to manufacturing, Chase said.

“But as it sits today, it is not a manufacturing plant,” he said.

Boeing already has begun to actively pursue its options on the 777X, including those within Boeing and interest it’s received from the outside, Boeing spokesman Doug Alder said in an e-mail.

“We chose to engage in Puget Sound first, but with the contract rejection by the union, we will now open up the process competitively and review all options for locating the 777X work,” he said.

The company is not being specific about any location or site right now, Alder said.

The GWEDC, however, did receive interest on the Boeing facility here during last month’s National Business Aviation Association’s convention in Las Vegas.

The show seemed more upbeat this year, Chase said.

“That in turn has generated interest by several companies we visited with during the show pursuing expansion opportunities in Wichita,” Chase said.

Some of them are interested in the Boeing site.

“There continues to be interest in the Boeing property,” he said.

As a result of the convention, “there’s some serious interest not only in Wichita and what we have to offer, but also the possible reutilization of Boeing’s property,” Chase said.

Chase declined to say whether interested parties are from the U.S. or abroad or whether they were interested in all or part of the Boeing facilities.

In the meantime, the GWEDC will explore the 777X work.

“If there’s any possibility of an interest, then we will move swiftly,” Chase said.

Cowen and Co. analyst Cai von Rumohr wrote in an analyst report Thursday that he thought Puget Sound could still end up getting a portion of the 777X work, although it’s not likely it will receive both the 777X final assembly and production of the all-new composite wing.

Boeing is expected to launch the 777X at the Dubai Air Show, which begins Sunday. At a minimum, analysts expect Boeing to announce launch orders from Emirates for 100 planes and a reconfirmation of an initial commitment from Lufthansa for 34, von Rumohr said.

Other commitments could include orders from Ehiad and an additional 75 planes from Emirates. Qatar and Cathey Pacific are also considered possible buyers, he said.

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