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Wed January 15, 2014
Business

Boeing Machinists' Plight Marks Changing Times For Labor

Originally published on Wed January 15, 2014 8:36 pm

The mood at the Seattle union hall was quiet, almost funereal on the night Boeing workers narrowly approved an offer to build the company's new airliner, the 777X.

Members of the International Association of Machinists and Aerospace Workers who had gathered had wanted to reject the offer. But they were in a tight spot. They risked losing the bid to one of the 21 states hoping to step in.

Washington state ultimately managed to keep the jobs. But after the state offered the company major tax incentives and union members took concessions, many are left unsatisfied.

Machinist Wilson Ferguson mourns the pension his union fought so long to get — and keep.

"We didn't get that pension when we formed a union 78 years ago. We didn't get that pension till 1959," Ferguson says. "Now it's gone and will never be back."

The Boeing contract phases out the pension over time, replacing it with a 401(k). The contract also increases health costs at a time when the company's profits and stock are soaring. Workers felt backed into a corner, Ferguson says. Boeing threatened to move the jobs away; local politicians, and even their own national union leaders, pushed the machinists to accept.

"Everybody was fighting against us and we lost by 1 percentage point," Ferguson says. "We put up a hell of a fight. But we lost." The new labor pact was approved with 51 percent of machinists voting yes.

This push by Boeing to wring concessions from its unionized workers echoes what's happened at other big manufacturers and demonstrates the state of organized labor across the country.

Two thousand miles away in Joliet, Ill., machinists at Caterpillar went on strike in 2012 during a contract dispute. They rejected cuts to the pension when Caterpillar was making big profits, just like Boeing is now. Almost four months later, they wound up accepting an only slightly improved contract.

Andy Stern, former president of the Service Employees International Union, sees the two events as connected.

"Boeing not only used the Caterpillar model, where it's extracted enormous concessions from its workers, which they didn't need in order to prosper," Stern says. "But then they went and took it a step further and hijacked and blackmailed the government."

Those are strong words — still, Boeing succeeded in winning almost $9 billion in tax incentives from Washington state. The company declined to comment, but Richard Gritta, finance professor at the University of Portland, says the aircraft industry is cutthroat and volatile and Boeing does have to worry about labor costs ballooning over time.

"You try to keep all your costs to a minimum because you know this industry is highly cyclical," Gritta says. "God knows what will happen to the airline business in the next four or five years."

Still, pushing workers to make sacrifices when companies are seeing profits is new, says Jake Rosenfeld, an associate professor at the University of Washington researching unions.

"For a period there, surrounding the decades around World War II, many major highly profitable and highly protected manufacturing firms, firms like Boeing today, just didn't take this kind of step," he says.

They didn't have to. There wasn't as much global competition, but that has changed. Union membership has dropped and political winds have shifted. Organized labor has few allies in the GOP and has even lost support among some Democrats.

But there is a bright spot.

Low-wage workers have struck a chord in the small town of SeaTac, Wash. Voters there raised the minimum wage to $15 an hour for airport and hospitality workers, a move that a judge has partly reversed. But now unions and activists want Seattle to follow that example and set a $15 an hour minimum wage. Stern says sentiment is changing.

"People are starting to say, you know, I may not like unions and I may not like government and I may not like Democrats, but I really don't like the fact that my kids and my grandkids can't get ahead anymore," Stern says. "And something has to change."

Even some Boeing workers are living up to their nickname "The Fighting Machinists." After filing charges with the National Labor Relations Board, they are pushing for a revote.

Copyright 2014 KPLU-FM. To see more, visit http://www.kplu.org.

Transcript

AUDIE CORNISH, HOST:

With the decline in manufacturing has come a decline in the fortunes of organized labor. Union membership is at its lowest point in decades. Recently, Washington state managed to keep a big contract with Boeing and the jobs that come with it only after union members agreed to wage and benefits concessions. And from KPLU in Seattle, Ashley Gross reports that what happened there says a lot about the state of organized labor across the country.

ASHLEY GROSS, BYLINE: The night Boeing workers narrowly passed the offer, the mood at the union hall of the International Association of Machinists and Aerospace Workers was quiet, almost funereal. The machinists who had gathered there were the ones who wanted to reject the offer. Wilson Ferguson mourns the pension his union fought so long to get and then keep.

WILSON FERGUSON: We didn't get that pension when we formed a union 78 years ago. We didn't get that pension till 1959. And now it's gone and it will never be back.

GROSS: The Boeing contract phases out the pension over time, replacing it with a 401(k) and it hikes health costs at a time when the company's profits and stock are soaring. Ferguson says the workers felt backed into a corner. Boeing threatened to move the jobs away; local politicians, and even their own national union leaders, pushed the machinists to accept.

FERGUSON: Everybody was fighting against us and we lost by one percentage point. So we put up a hell of a fight. But we lost.

GROSS: This push to wring concessions from Boeing's unionized workers echoes what's happened at other big manufacturers. Two thousand miles away in Joliet, Ill., machinists at Caterpillar went on strike in 2012 during a contract dispute.

(SOUNDBITE OF STRIKE)

GROSS: The workers shouted the word scab at anyone driving into the plant. They rejected cuts to the pension when Caterpillar, just like Boeing, was making big profits. Almost four months later, they wound up accepting an only slightly improved contract. Unions have noticed, says Andy Stern, former president of the Service Employees International Union.

ANDY STERN: Boeing not only used the Caterpillar model, where it's extracted enormous concessions from its workers, which they didn't need in order to prosper, but then they went and took it a step further and hijacked and blackmailed the government.

GROSS: Those are strong words. Still, Boeing got almost $9 billion in tax incentives. The company declined to comment, but University of Portland finance professor Richard Gritta says the aircraft industry is cutthroat and volatile and Boeing does have to worry about labor costs ballooning over time.

RICHARD GRITTA: You try to keep all your costs to a minimum because you know this industry is highly cyclical. God knows what will happen to the airline business in the next four or five years.

JAKE ROSENFELD: This here captures the real story of the plight of private sector middle class workers over the last 40 years.

GROSS: Jake Rosenfeld at the University of Washington researches unions. He says pushing for workers to make sacrifices at a time of profits is new.

ROSENFELD: For a period there, surrounding the decades around World War II, many major highly profitable and highly protected manufacturing firms, firms like Boeing today, just didn't take this type of step.

GROSS: They didn't have to. There wasn't as much global competition, but that has changed. Union membership has dropped and the political winds have shifted. Organized labor has few allies in the GOP and has even lost support among some Democrats. But there is a bright spot.

(SOUNDBITE OF PROTEST)

GROSS: Low-wage workers have struck a chord in the small town of SeaTac, Washington, near the airport. Voters there raised the minimum wage to $15 an hour for airport and hospitality workers. That's been partly reversed in court, but now unions and activists want Seattle to do the same thing. Stern, formerly with the SEIU, says sentiment is changing.

STERN: People are starting to say, you know, I may not like unions and I may not like government and I may not like Democrats, but I really don't like the fact that my kids and my grandkids can't get ahead anymore, and something has to change.

GROSS: Even some Boeing workers are living up to their nickname The Fighting Machinists. They've filed charges with the National Labor Relations Board and are pushing for a re-vote. For NPR News, I'm Ashley Gross in Seattle. Transcript provided by NPR, Copyright NPR.