Union Divided on Whether to Vote on Boeing Offer

Union divided on whether to vote on Boeing offer
Reed Saxon/AP

By MIKE BAKER

SEATTLE — Leaders in the International Association of Machinists publicly differed Friday on whether to bring Boeing’s (BA) latest contract offer to a vote, exposing tensions within the union over how to handle the high-stakes negotiations.

National union spokesman Frank Larkin said Friday that officials were exploring the idea after hundreds of members demanded an opportunity to vote on the contract to secure work on the 777X airplane. Larkin said members have always had the final say and that they have every right to vote on the terms of the offer.

But local union officials said Friday they don’t see any point in bringing it to a vote because it’s too similar to a contract the union rejected a month ago.

“So, until Boeing changes its conditions, we don’t have an offer to vote on,” said District 751 President Tom Wroblewski in a statement.

A latest round of contract talks collapsed Thursday after local officials with the Machinists said they couldn’t recommend Boeing’s latest proposal to members. Local Machinists spokesman Bryan Corliss says Boeing has withdrawn the contract offer.

Boeing spokesman Doug Alder, however, said the offer was rejected by the union, not withdrawn. He declined further comment Friday.

Local union officials have seemed to disagree with their national leaders in recent weeks on how to handle Boeing’s offers.

That division was clear last month, when local union members voted to reject a contract negotiated by IAM leadership.

Boeing and the Machinists have been exploring a deal that would secure the production of the new 777X airplane in the Puget Sound and the thousands of jobs that come with it.

This week, Boeing made some changes to its original contract offer, backing away from a proposal that would slow the rate at which employees rise up the pay scale and adding an additional $5,000 in bonus pay. The biggest sticking point appears to be the company’s insistence that workers move from a traditional defined-benefit pension to a defined-contribution savings plan.

The local machinists said the company’s latest proposal was too high of a price to pay to secure the 777X.

“I think you’ll agree these were very minor changes, and not nearly enough to offset the things Boeing was trying to take away from you, and for the Machinists who will join us in the future,” Wroblewski wrote in a message to members Friday morning.

Looming over the talks is the prospect that the company could build the airplane elsewhere. Boeing said it has received proposals from 22 states eager for the 777X jobs, with some proposing multiple sites. The company said 54 sites are now being evaluated.

In its own bid to win the 777X jobs, Washington state recently approved tax breaks for Boeing valued at $9 billion over the coming years, along with legislation to improve aerospace training programs and the permitting process.

Chicago-based Boeing began offering the 777X in May, but it’s still finalizing plans for the plane and aiming to deliver the first aircraft by the end of the decade. Boeing has said it is expected to carry as many as 400 passengers and be more fuel efficient than the current 777.

At the Dubai Airshow last month, Boeing received orders for 225 such planes from three airlines.

  • Last week, Walmart agreed to pay an $81.6 million settlement after pleading guilty to violating the Clean Water Act and other environmental laws in California and Missouri. It’s not the first time Walmart has had to pay up for environmental violations, either. In 2012 the company paid a $27.6 million settlement to settle similar charges from California authorities.

    Federal prosecutors claimed that poorly trained workers disposed of fertilizer, pesticides, and other toxic materials by dumping them into trash bins or pouring them into drains connected with the sewer system.

    In other words, Walmart’s reliance on employees lacking key training cost it nearly $110 million for these violations alone.

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    Costly Mistakes Are Piling Up

  • Granted, Walmart has updated its training programs to teach employees how to dispose of toxic materials. However, here are some reasons to believe this scandal is a symptom of a larger problem.

    Consider the Huffington Post’s analysis of an internal Walmart document leaked last year. A low-level worker at Sam’s Club (a division of Walmart) who starts out making around $8 per can expect to make about $10.60 per hour after working at the company for six years if he is a “solid performer” and gets one promotion (the average rate). With wages like those, it’s no surprise that the company’s annual turnover rate was more than 37 percent in 2011.

    Because it’s not paying employees enough to stick around, Walmart has an incentive to invest as little as possible into training each employee, lest their investment simply give their employees the skills to obtain higher-paying work elsewhere.

    Under its current labor model, the company certainly has reason to train its employees well enough to avoid a scandal — but just well enough — and sometimes skating along that edge turns out to be costly, as is the case when employees don’t know how to properly deal with toxic waste.

    Calculated Risks Lead to Employee Turnover


  • Walmart’s labor model also brings other risks. As Motley Fool analyst Alyce Lomax points out, the company has reduced its workforce by 120,000 since 2008 despite adding 455 more stores.

    According to Bloomberg, this workforce reduction has driven customers away due to the company’s inability to keep its shelves stocked and keep checkout lines moving.

    Clearly, these are known issues. Even a single out-of-stock item can significantly affect sales. Walmart went so far as to hire an outside firm — Acosta — to secretly audit the availability of certain items in its stores. Bloomberg quotes a 2012 study in which Erick Kritsky, Acosta’s director of application development, said, “In a superstore, if we fix a void at the beginning of the month, one single SKU in oral care translates to about $360,000 in sales at the end of the month.”

    Fewer Workers Leads to Frustrated Shoppers

  • The high cost of cheap labor isn’t just monetary. Cheap labor also brings risks of worker safety scandals, such as the recent building collapse in Bangladesh that killed more than 1,100 workers and a factory fire last year that killed 112 people. Both factory buildings contained evidence that the companies were doing business with Walmart.

    While retailers like Walmart may be drawn to Bangladeshi factories because they are low-cost options, these discounts come at a cost to worker safety when factory owners fail to invest in safe working conditions to ensure they can offer the lowest possible prices.

    In addition to creating bad PR, safety scandals can cause worker unrest and disrupt a business’ supply chain. For example, after the building collapse, violent protests erupted in Bangladesh, in which workers set fire to at least two factories.

    Even Bigger Dangers Behind Workforce Woes

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