The Boeing Exodus

777X_Boeing

Boeing 777X, sequel to the companies’ venerable long-range airliner

Washington State just can’t seem to keep Boeing from breaking up with it.

In their latest decision made Thursday, Boeing indicated it was shifting hundreds of Washington jobs out of state in a restructuring of their research and technology operations towards the Midwest and Southern regions.

In addition to the approximately 800-1,200 jobs in Washington that won’t exist much longer, California is itself losing between 200 and 300 jobs. All this on the heels of much larger negotiations taking place between the International Association of Machinists in Washington and Boeing about the potential site of wing production and final assembly for the 777X, sequel to the companies’ highly-successful long-haul airliner.

A previous contract proposal was voted down a month ago that would have secured Everett as the assembly point. That prompted Boeing to open a site search process that would have moved production out of state, further crippling state ties to a company that in 2001 moved its corporate headquarters from Seattle to Chicago.

Of particular interest in Boeing’s latest exodus from Washington are the sites chosen to house its research and technology divisions. As Washington and California (both unionized states) lose hundreds of jobs, two of the three states (South Carolina and Alabama) receiving them have right-to-work statutes (the third state, Missouri, is unionized).

While this may certainly be coincidental, the calculations surrounding right-to-work and future decisions made by Boeing are relevant. Boeing is no stranger to bolstering it’s workforce in right-to-work states at the expense of  established unionized sites in Washington and other states.

In 2011, the company came under intense scrutiny, and an eventual lawsuit, from the National Labor Relations Board (NLRB) after opening a non-union production line in South Carolina. The NLRB alleged Boeing was retaliating against it’s machinist’s union after failing to reach a contract extension. While the lawsuit was withdrawn following an extensive labor agreement, Boeing made a strong statement in opening it’s South Carolina plant: it no longer feels indebted to remaining in states (like Washington) where it has deep ties, especially if by moving and consolidating its operations in right-to-work states, it can avoid lengthy union negotiations that distract from its business of building airplanes.

Which ought be troubling to Washington state legislators. Any additional hemorrhaging of Boeing jobs to states not spelled ‘Washington’ not only represents a significant loss of jobs, tax revenue and economic activity, but could also embolden other unionized companies to flee the state for greener pastures. Washington, in terms of union density, ranks fourth in the nation, with 19% of it’s wage earners belonging to a union. Companies will no longer stay if they can cut costs elsewhere.

With Boeing, perhaps they’re beginning to make that move. If renewed labor negotiations fall through again, count on right-to-work states to come beating down the door, hoping to lure the aerospace giant to a state with less red tape.

In the meantime, public break up’s are ugly. We just might be witnessing one long in the making.

UPDATE: Since publication of this post, labor talks between Boeing and its machinist’s union have broken down, as the union rejected what management described as its “final” offer. Look for Boeing to intensify its nationwide search for an alternate assembly point for its new 777X airliner. Place your bets that the state will be right-to-work.

UPDATE II (Jan. 3,2014): In a second vote of the Machinist’s union, members by a slim 51% margin accepted Boeing’s contract proposal, ending tense labor negotiations that threatened to send Boeing packing in search of a production site for their new 777X airliner. In a deal that will keep the 777x at the Everett, WA plant, union members will lose some benefits, including pension plan accruals, in favor of a defined-contribution retirement plan. Source: Seattle Times

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About Michael Haugen

Michael Haugen is a full-spectrum conservative and recent graduate from Eastern Washington University (BS Biology). His main interests in politics and public policy center around health care, education and tax reform. He'll be returning to EWU in 2014 to complete a Master's degree in Public Administration. Follow him on Twitter: @HaugenTRA

One Response to “The Boeing Exodus”

  1. Some unions still feel that they are in charge of the companies they work for. Stepping on one’s crank is typical. But politicians are not innocent either. I will never forget the long line of 727s lined up from Lake Washington to airport way on the south. Due to using the same engine as the F-4 nd during a shortage due to Viet Nam, These completed aircraft were without engines.

    Boeing started to ferry these aircraft to Kansas, took the engines off and brought them back to install on the next in line. The issue? End of year inventory tax. This repressive tax was huge when completed aircraft values were taxed. Strike one.

    Repeated strikes by union local 751 over the years saw orders go to other companies as Boeing ground to a halt, unable to compete at union wages. Strike two.

    Boeing relocates it’s headquarters to Chicago as a prelude to deserting the town it started with. Strike three, yer out!

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