Machinists Reach Tentative Deal With BoeingCopyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
By Sam Hananel and Gene Johnson
SEATTLE (AP) -- As Boeing executive Jim Albaugh spoke to an aerospace conference in New York, recent strikes by the company's workers in Washington state weren't far from his mind.
"We've had strikes three out of the last four times that we've gone to the table with the union," he noted Wednesday morning. "To me it was a lose-lose for both of us."
But he gave no indication of the blockbuster deal that would be announced by the company's Machinists union just two hours later: that in exchange for keeping work on Boeing's modernized 737 in the Puget Sound region, the union had agreed to drop a federal complaint over the company's decision to open a new $750 million, nonunion plant in South Carolina.
The National Labor Relations Board case had become a major political issue, with Republican presidential candidates using it to bash the Obama administration. While the labor board is an independent agency, it is dominated by appointees of President Barack Obama, and settlement of the Boeing case removes a potentially damaging element for Obama in the 2012 campaign.
The four-year extension of the Machinists' collective bargaining agreement faces a ratification vote by union members next Wednesday. It was described by both sides as a win-win: Boeing gets a substantial stretch of labor peace; the union gets guaranteed jobs.
"It's hopefully the start of a new day of doing business when it comes to negotiating contracts with the Boeing Co.," said Tom Wroblewski, president of Machinists Union District 751.
If the deal is finalized, it would appear to leave in place the work at a new $750 million Boeing plant in South Carolina, a right-to-work state where the company opened a new production line for its 787 airplane.
The NLRB filed a lawsuit earlier this year alleging that Boeing violated labor laws by opening the South Carolina line. Acting on a complaint from the union, the agency claimed that Boeing was punishing Washington state workers for past strikes and said the company should return the work to Washington.
Boeing has vigorously denied the charges, claiming it opened the South Carolina plant for valid economic reasons.
The new agreement guarantees that a different aircraft - the 737 Max - would be assembled at union facilities in Renton, Wash.
After being stung by Boeing's decision to move its headquarters to Chicago a decade ago and by the decision to open the South Carolina plant, politicians in Washington state welcomed the notion of building the 737 Max in Renton.
Gov. Chris Gregoire commended Boeing and the union for an agreement that "shows a strong commitment by both sides to secure the future of aerospace in Washington state."
"Washington state is, and will continue to be, the world's premier center for aerospace known for building the safest and most innovative planes," she said in a statement. "In the last few years, I'm proud that Washington state has landed the 787, the Air Force refueling tanker, and now the 737 Max."
Wroblewski said that if union members vote to approve the deal, the union would inform the NLRB that it has no further grievances with Boeing.
Lafe Solomon, acting general counsel at the labor board, called the agreement "a very significant and hopeful development."
"The tentative agreement is subject to ratification by the employees, and, if ratified, we will be in discussions with the parties about the next steps in the process," Solomon said.
Boeing spokesman Tim Healy called the new contract with the union "a starting point of a new relationship" with the International Association of Machinists.
Gary Chaison, professor of industrial relations at Clark University, said the union seems to have used the South Carolina dispute as leverage to guarantee other unionized jobs in the Seattle area, but on a different plane.
"I think the NLRB will be very happy to get this case off the table," Chaison said. "This was probably the most controversial thing the NLRB has done in two or three decades."
The labor board brought its lawsuit at the request of the union, so if the union no longer has a dispute, the board likely would stop pursuing the case.
South Carolina Gov. Nikki Haley and the state's congressional delegation had expressed outrage at the NLRB lawsuit, saying it threatened thousands of jobs and millions of dollars invested in the new Boeing facility in Charleston.
Haley said called the tentative deal a win for Boeing.
"Finally, today's actions confirm two things we've said all along: the NLRB is nothing more than a rogue agency run by the president's union backers; and that when the feds attack a company in South Carolina they can expect us to fight back, and expect us to win," Haley said in a prepared statement.
Wroblewski was flanked by about two dozen union leaders at the Machinists hall in Seattle as he announced the deal. He said it came after six weeks of secret talks that began with an overture from Boeing management, and he called the job security offered by the deal unprecedented.
Union members in Washington, Oregon and Kansas are scheduled to vote Dec. 7 on the tentative agreement. It calls for annual wage increases of 2 percent, cost-of-living adjustments, an incentive program intended to pay bonuses between 2 percent and 4 percent, a ratification bonus of $5,000 for each member, and improvements in the pension program. But it also would raise workers' share of health costs.
Boeing is building its new 787 in Washington state, but opened a second - non-union - assembly line in Charleston. The NLRB complaint arose because it said Boeing opened the second plant to avoid legal union strikes in Washington.
Boeing appeared to be considering a similar move for an updated 737 it plans to build, called the 737 Max. The 737 is built in Renton, Wash., now, but Boeing said in July it was studying other locations.
Haley had insisted that GOP presidential candidates talk about the issue as they courted voters in South Carolina, the first-in-the-South primary state. Candidates slugged away at it early and often. Mitt Romney took an early swing in May as made his first pre-campaign stop and laid the blame Obama's feet.
"How in the world can the president justify the federal government taking power from South Carolina and not allowing South Carolina to compete on a fair and level playing field," Romney said. "It's simply inexcusable."
South Carolina's unemployment rate - 10.5 percent in October - has been among the highest in the nation. The Boeing issue gave presidential hopefuls room to talk about something other than that in a state the GOP has firmly controlled since 2002.
Don't Miss: Companies Hiring Now
Stories from CNN Money
- One in Five American Men Don't Work: Where's the Outrage?
- Job Market Underdogs
- Younger Bosses, Older Underlings