Washington Gov. Jay Inslee on Tuesday pressed lawmakers and the Machinists union to approve separate deals to ensure Boeing builds its new 777X long-range jet in the Puget Sound area.
The governor is calling the state Legislature into special session Thursday to approve billions of dollars in incentives to try to keep production of the new aircraft in the Northwest.
In a press conference surrounded by representatives of the International Association of Machinists as well as Boeing, Inslee said the deal is contingent on the incentive package as well as the union’s approval of a tentative labor agreement ironed out secretly with Boeing over the past few days.
“If these two things happen, we will get the largest Boeing economic expansion program of our lifetime,” Inslee said.
The package of incentives Washington lawmakers will consider includes extending commercial airplane tax incentives for Boeing until 2040, expanding current sales tax exemptions on buildings where airplanes and wings are built, investing in education to boost enrollments in aerospace fields and train workers, streamlining permit applications to speed up development of large industries as well as supporting transportation and water quality.
The package includes $8 billion in tax breaks for Boeing until 2040.
“If we can do this in the next seven days, we can be certain that Washington’s aerospace future will be as bright as its past,” Inslee said.
The governor said for every dollar spent to keep Boeing work in Washington state, the return would be $3.
Boeing executive Ray Conner attended the press conference, but Inslee said he chose not to speak or answer questions.
As part of the proposed labor agreement, the union must agree to big cuts in future pension and health care benefits for Boeing to build the new jet near Seattle.
If not, the aerospace giant is prepared to take the work elsewhere. Among other sites under consideration is North Charleston, where Boeing is buying 267 acres next to its existing 787 Dreamliner assembly plant for an unspecified purpose.
South Carolina Commerce Department spokeswoman Allison Skipper said Wednesday the agency does not comment on “prospective business.”
The package with the union includes substantial cash awards, including a large ratification bonus and a generous buyout plan for workers close to retirement, carrots offered to union members to win their votes.
The deal includes a signing bonus of $10,000 for all members as well as a “golden handshake” buyout that would allow retirement with boosted pension terms of $95 per month per year of service for anyone over age 58, The Seattle Times reported.
In essence, it entices younger workers with a signing bonus and older workers headed for the door. Others would get little.
The downsides of the offer are higher health care premiums and a radically changed pension plan.
The Machinists union announced late Tuesday it will vote on the deal, possibly as early as next Tuesday.
“Only a project as significant as the 777X and the jobs it will bring to this region warrants consideration of the terms contained in Boeing’s proposal,” said union representative Tom Wroblewski. “While not all will agree with the proposal’s merits, we believe this is a debate and a decision that ultimately belong to the members themselves.”
If Boeing builds the plane and its wings in the Seattle area, the Machinists will win a new eight-year labor agreement that will expire in 2024, according to a statement from the union.
The proposal also includes modifications to the current labor agreement, including an end of pension accruals for current employees and the establishment of an alternative company-funded retirement plan.
The new pension plan is for new hires only. It would have the company contribute a fixed percentage of gross salary into a retirement savings account each year; 10 percent the first year, 8 percent the second; 6 percent the third, and 4 percent every year thereafter, according to the Seattle newspaper.
The offer would also change the wage structure so that new hires would take 16 years to reach the top of the pay scale instead of the six years it takes now.
“Any proposal can be changed up until the last minute,” union spokesman Frank Larkin said.
The Machinists union might not buy the deal on the table, aviation analyst Scott Hamilton said.
“That’s going to be tough for the union to swallow,” he said.
The 777X, Boeing’s bigger, longer-range, more fuel-efficient plane, is slated for production by 2017 or 2018 and could be in the air by 2020.
The new jet is expected to be formally introduced during the Dubai Air Show that starts Nov. 17. Scores of orders for the new plane from Middle East airlines are expected during the event.
Reach Warren L. Wise at 937-5524 or twitter.com/warrenlancewise.
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