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Latest News - January 2014

January 7, 2014
The rift between machinists: CNBC Explains
Source: CNBC News
By: Phillip LeBeau

Machinists union members and supporters cheer at a rally asking members to vote against a proposed contract Thursday, Jan. 2, 2014, in Seattle.

Boeing's new labor contract with members of the International Association of Machinists District 751 has shown cracks in the foundation of solidarity between the local and national offices of the IAM.

It's a rift that has become bigger due to the differing approaches the two offices took while dealing with the Boeing labor contract. While the contract has been ratified, the fact is many local machinists in the Puget Sound area are still upset about a deal that will alter their pay and benefits through 2024. In fact, some machinists are talking about protesting the vote.

Why? It has to do with the different views machinists have of Boeing and the new contract that guarantees the company's new 777X plane is built in the Seattle area.

The national leadership of the IAM steered the contract talks with Boeing for most of the last year. At the heart of those negotiations was the question of where Boeing would build its new 777X plane, and with that decision, the need for several thousand workers.

The national office of the IAM feared Boeing would locate future assembly of that plane someplace where nonunion employees would do most of the work. So the national IAM struck a deal with Boeing that called for rank-and-file machinists to convert their traditional pension plans to 401(k)-style retirement accounts.

They also agreed to changes in the medical benefits for local union members. From the perspective of the IAM's national leaders, the concessions are the price to pay for guaranteeing job security for thousands of local machinists.

Local machinists choose job security, reluctantly

Local leaders of IAM District 751 were not happy that their national leaders set up a deal with Boeing. From their perspective, the national leaders lost leverage to hang on to the current pensions and medical benefits by negotiating a deal two years before the current contract expires.

(Read more: Airbus dealt a blow as flydubai commits to Boeing)

Union leaders prefer negotiating deals close to the end of current labor contracts so they have the threat of a strike, which can force the company to make concessions.

In addition, Local 751 leaders felt the national leadership of the IAM underestimated the advantage the union has with Boeing because of decades of experience building and servicing thousands of Boeing planes. That's why many local members said Boeing would be foolish to locate the new 777X plant in a city or state with little or no experienced workers to build the new plane.

(Read more: Fighter jet with 3-D printed parts flies for the first time)

Finally, the local members are upset that leaders from the national level were negotiating a contract that would impact local workers. In other words, local workers think their local leaders should have called the shots, not the national office.

It's unlikely that local members of IAM District 751 will call for a recount of the vote that approved the new Boeing contract by a slim 51 percent to 49 percent margin. However, the hurt feelings and bad blood between local and national machinists is likely to linger for many years.




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