IAM strike back on at Boeing

September 5, 2008

Darrin Hoop argues that the IAM has the leverage to take on Boeing--and win.

UPDATE: Members of the International Association of Machinists at Boeing walked off the job in the early morning hours September 6 after last-minute contract talks failed to produce an agreement.

Hundreds of workers, many of them saying they were angry with union leaders for delaying a strike for 48 hours after an overwhelming membership vote, were on the picket lines as the walkout began. The IAM had agreed to Boeing's request for the two sides to meet with a federal mediator, but there was little movement by management away from its contract demands, according to reports.

Boeing said it planned to continue building aircraft during the IAM walkout, using employees who aren't part of the union.

A POSSIBLE strike at Boeing was delayed by 48 hours after union leaders defied an overwhelming membership vote for a walkout--instead, allowing the company to return to the negotiating table.

A strike would involve 27,500 members of the International Association of Machinists and Aerospace Workers (IAM) against the world's second-largest maker of commercial airplanes.

On September 3, by a resounding 80 percent margin, the machinists voted down the "last, best, and final" offer from Boeing. Then, by an even bigger margin of 87 percent, voted to authorize the IAM leadership to call a strike.

But less than three hours before the 12:01 a.m. deadline on September 4, the union came under intense pressure from Washington Gov. Christine Gregoire, a Democrat, and the Federal Mediation and Conciliation Service. IAM leaders gave in and agreed to delay the strike deadline for 48 hours. A federal mediator will now join the talks, and the contract is now set to expire at 12:01 a.m. on September 6.

While both sides agreed to a 48-hour media blackout, IAM District 751 President Tom Wroblewski kept expectations high by saying in a statement on the union's website: "Your leadership has agreed to give the company ONLY 48 hours at the table with a federal mediator. It is one last chance for Boeing to bring us an exceptional contract offer. We will not sell you out. If Boeing does not produce the offer you expect, the strike is still on."

More than 2,000 Boeing workers turned out for the contract and strike vote in Renton
More than 2,000 Boeing workers turned out for the contract and strike vote in Renton (Dan Troccoli | SW)

However, many machinists, carrying signs that read "On Strike," were irate at the strike being postponed. At a union meeting on the evening of the original strike deadline, they shouted union leaders off the stage with screams of "sellout" and "what was the strike vote for?"

THESE MEMBERS have to look no further than the settlement of the last contract for reasons to worry about the motives of both Boeing and the IAM leadership. In 2005, union leadrs settled after a 28-day strike only days after Boeing brought in a paid consultant--none other than Richard Gephardt, the former Democratic minority leader in Congress, who was endorsed by the IAM in his 2004 presidential bid.

As former machinist David Clay told Socialist Worker at the time, "Gephardt was brought in on these negotiations because he was successful in assisting Boeing in the sale of its Wichita Division" earlier this year. "This resulted in a 10 percent wage cut and other huge takeaways from the machinist union members. He was rewarded with a seat on the board of directors at the company that bought Boeing Wichita, Spirit/Onex."

The contract achieved after the 2005 strike did stop some of Boeing's worst concessionary demands and made some gains. Yet that agreement, especially in light of Boeing's incredible profits since, could have won much more.

Today, Boeing is flush with cash. Since the last contract was ratified, profits have been $8.5 billion. The company has made $13 billion since 2002, with $4.1 billion of that coming last year alone. Profits were over $2 billion in the first half of this year.

It's easy to see where the income is coming from. For one thing, there was no general wage increase (GWI) in the last contract. Instead, workers received an immediate bonus after ratification and lump sum bonuses of $3,000 in each of the next two years of the contract.

The contract did contain a 16.7 percent increase in pension benefits, raising from $66 to $70 the amount Boeing would pay workers per year of service upon retirement. This resulted in a pension of approximately $2,100 a month after 30 years of work. However, as Business Week pointed out in 2005, Boeing could have met the IAM's demand for a pension multiplier of $80 (which is what Boeing is offering in this contract) for just $90 million more over the three-year life of the contract.

That increase would bump the monthly pension payment to approximately $2,400 a month after 30 years of work. By contrast, Boeing's executives receive "golden" pensions. An executive who only "earns" $300,000 a year will receive an annual pension of $144,000, or a mere $12,000 a month--five times what the company is offering the IAM. And the top executives who get $3 million a year receive an annual pension of $1,440,000, or $120,000 a month.

Given these astounding numbers, no one should listen to (or shed any tears for) Boeing Vice President of Human Resources Doug Kight. "We offered employees the best package of pay and benefits in the aerospace industry," he said after the strike vote. "We are disappointed with the vote on the contract offer."

Management's disappointment is real. Boeing hoped to use the union's undemocratic constitution to its advantage. For a strike to happen, even if a majority of the members vote the contract down, two-thirds must vote for a strike to take place.

In 2002, this worked to the company's benefit, when 62 percent voted down management's final offer. As a result, the contract came into effect, with concessions in health care and outsourcing, even though just one-third of union voted in favor of the deal.

This time, Boeing's "last, best and final" offer frontloaded the contract with money, as management tried once again to buy off one-third of union members in a strike vote. GWIs were 5 percent in the first year, with 3 percent in each of the next two years. The union wants a 13 percent increase over three years.

Boeing also offered a lump-sum, first-year-only payment of 6 percent of gross pay earned between August 31, 2007 and September 4, 2008, or $2,500, whichever is greater. Also on the table was a ratification bonus of $2,500 if the proposal had been approved September 3. In addition, after having entry-level pay rates frozen for 16 years at $9.72, Boeing offered to raise entry level rates by $2.28.

Boeing was banking on a change in the demographics of the workforce to shove through a concessionary contract. According to Bloomberg.com, in 2005, when 18,500 workers walked out, there were only 37 machinists under the age 30. Now there are 2,300--about 10 percent of the IAM membership in Boeing's main Seattle manufacturing hub--because Boeing has recalled laid-off workers and hired new employees.

Boeing's hiring spree since the last contract has cut the average age of machinists to 46 from 49. The average wage fell in the past year by $1 an hour, to $26. So while the average machinists salary is about $54,000 a year, more than 4,000 machinists make less than $30,000, according to the union.

What's more, the overwhelming strike vote showed that the concessions Boeing wanted were too great to buy off these newer workers. IAM members knew that any gains in wages would be negated by the cuts management wanted in health care. For example, in the Traditional Medical Plan, annual deductibles would increase for individuals from $200 to $225, and for families from $600 to $675.

In addition, annual out-of-network deductibles would increase for individuals from $200 to $450 and for families from $600 to $1,350 (for family of three or more). And annual out-of-pocket maximums for a family of three or more would increase from $4,000 to $6,000 per year.

Finally, the biggest contract issue revolves around outsourcing. According TheStreet.com, about 70 percent of the work on Boeing aircraft today is done by outside employees. As a result, the IAM is pushing to strengthen contract language to ensure that no union member will be laid off because of subcontracting. Boeing has refused this language.

IF WORKERS walk out, it would be the fourth time the IAM has done so in the last 20 years--following earlier strikes in 1989, 1995 and 2005.

This time, the stakes in this battle for the IAM--and for the overall labor movement--are higher. That's because, in addition to being the world's second biggest commercial airplane manufacturer, Boeing is also the Pentagon's number two military supplier. And according to TheStreet.com, Boeing is the largest employer in Washington state and largest exporter in the U.S.

But as powerful as Boeing is, the machinists have the power to take on the company--and win. In fact, the IAM arguably has the most leverage it has ever had, thanks to Boeing's backlog of more than 3,400 aircraft it has orders to build. This eight-year backlog-- worth $346 billion in future sales to Boeing--is the biggest in its history.

Much of the union's leverage is due to the backlog of 900 orders (worth $155 billion) for the new 787 Dreamliner. According to Business Week, it's the most anticipated commercial jet in history.

However, the 787 is more than 15 months behind schedule. The delay has cost Boeing some $2 billion or more. As a result, a strike could cost the company $120 million a day, or $3 billion a month, as customers' planes sit idle on the production lines.

Boeing workers have a sense of their power--and the rank and file is as angry as ever. On the day of the strike vote, more than 7,000 machinists marched from the plant in Everett to the IAM hall to vote. At the same time, some 2,000 of the 3,600 machinists from the Renton plant marched and rallied.

Matthew Hardy, a 21-year Boeing veteran and mechanic at the Renton plant, described the mood among union members. "In 2005, we felt we were in a position to get a decent contract," he said. "We went out on strike. Thirty days later, Mark Blondin (former president of IAM District Lodge 751) negotiated a contract in D.C. in secrecy. We basically accepted the same contract we went out on strike for.

"Everything is booming now for Boeing--record money, record backlogs. Because of the recent union elections, the company thinks the union is divided. If we don't strike now, the union will look weak."

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