Last week’s vote by Boeing machinists to approve the company’s contract offer was a landmark in more ways than one.
To begin with, it apparently will ensure that construction and assembly of the 777X will remain in Washington state. That was the deal behind $8.7 billion in tax incentives that were approved by the state Legislature late last year in an effort to keep the project in the Puget Sound area. Called to a special session by Gov. Jay Inslee, lawmakers approved extending tax breaks, which were scheduled to expire in 2024, until 2040 — contingent upon the 777X landing in the state. A separate bill earmarked $17 million in state money for aerospace training programs.
The importance of the aerospace industry to the future of Washington’s economy was evident in the support that Boeing received from Southwest Washington lawmakers. Rep. Sharon Wylie, D-Vancouver, was the only local legislator to vote against the tax incentives, saying she had a lot of questions about the bill, “and, frankly, there wasn’t time to answer my questions, so I voted no.” That’s a reasonable, thoughtful position, even if others disagreed. Rep. Ed Orcutt, R-Kalama, and Rep. Liz Pike, R-Camas, voted against funding for aerospace training. All other Southwest Washington lawmakers supported both bills.
Perhaps more indicative of the large stakes at play is the fact that at least 21 other states salivated at the opportunity to land the 777X if Boeing airlifted the project out of Washington. Missouri, for example, approved $3.5 billion in state and local tax incentives in an effort to lure the 777X and the jobs it would have brought. Given the fact that Boeing moved its headquarters in 2001 to Chicago, and that recent production plants have been built in other states, there was little reason to believe the company would maintain loyalty to its birthplace when it came to siting the 777X.
So, Friday’s vote by the International Association of Machinists to approve Boeing’s latest contract offer was, indeed, significant. The company quickly announced that the 777X would be built in Washington, and Gov. Inslee said, “Tonight, Washington state secured its future as the aerospace capital of the world.”
But the importance extended well beyond that. By agreeing to a contract that eliminates a defined pension plan, machinists acknowledged an inexorable change in employee benefits. Boeing had sought individual retirement plans, placing the burden for investments and financial security upon employees. It’s a move that nearly all private companies have adopted in recent decades, but it’s one that some union leaders had proclaimed would be disastrous for Boeing workers. Employees saw through that rhetoric and accepted a very generous offer: The company will deposit an amount equal to 10 percent of a machinist’s gross salary into his or her retirement account for the first two years of the contract, 6 percent the third year and 4 percent each subsequent year.
That, in many ways, could prove to be the most significant outcome from the entire saga. The balance between taxpayers and companies has changed, as evidenced by Washington’s vast tax breaks for Boeing; the balance between employers and employees has changed, as evidenced by the company’s changing pension system and its threat to leave thousands of workers behind. Neither of these changes is particularly new, but they were brought into focus when they applied to a company as large and as steeped in Washington tradition as Boeing. Landmark, indeed.