Boeing families in Seattle area feel spurned over 777X project

By Maria L. La Ganga and W.J. Hennigan

Dec. 9, 2013 6 AM PT

MILL CREEK, Wash. — Shannon Ryker is a third-generation employee of aerospace giant Boeing Co. She followed her grandfather into the huge plant in nearby Everett. And her father. And her Uncle Bob.

Her youngest sister worked at Boeing until she became pregnant. Both of Ryker’s brothers-in-law and one of their dads work there. Her other sister’s stepson has applied for a Boeing job.

So it wasn’t easy for the 37-year-old mechanic to sit down in her crowded apartment here on a recent Sunday and write to Boeing management about her growing disappointment.

“Like my 86-year-old grandmother, I would like to tell my children and grandchildren that ‘Boeing has been good to this family,’” Ryker wrote in an open letter that has since landed on company break-room tables and in co-workers’ email in-boxes. But now, she said, “I no longer can hold my head high and say I am proud to work at Boeing.”

At issue is the company’s hunt for a site to build its newest airliner, the 777X. Ryker and other members of the International Assn. of Machinists and Aerospace Workers District 751 overwhelmingly voted last month to reject a contract that would have cut some pension plans and healthcare benefits but guaranteed the program would stay in the Pacific Northwest.

FULL COVERAGE: Building Boeing’s 777X jetliner

Since the vote, Washington’s largest private employer has been looking elsewhere for a site to build the plane, a potential move that threatens the state economy and the middle class Boeing helped create.

The company’s decision reflects the hard realities of the industry and the latest skirmish in the fight for union survival. Boeing says the contract concessions are essential to compete financially with its longtime European rival Airbus, which plans to deliver its own new twin-aisle jetliner next year.

The two companies have been locked in a duopoly of the large jet market since the 1990s and are currently in a dead heat. Last year, Boeing delivered just 13 more aircraft than Airbus, a far cry from its 297-plane advantage in 1989.

Boeing Commercial Airplanes Chief Executive Raymond L. Conner laid out the stakes in a letter to workers before the Nov. 13 union vote on the 777X, an essential part of the company’s long-term product strategy.

“What we want to avoid is that we become one of the companies that made decisions too late to remain competitive in the marketplace,” he wrote.

Boeing gave other states until Tuesday to submit proposals to build the wide-body’s latest generation. Within days of the union vote, California, Missouri and Texas made appeals to Boeing in an attempt to snag the program.

The company joins a long line of manufacturers and municipalities that have sought to wring concessions from unions that once negotiated comfortable pensions and wages.

After a bitter strike in 2008, the company shipped much of the work on its 787 Dreamliner to South Carolina, a right-to-work state. Seven years earlier, it moved its headquarters from Seattle to Chicago. Its Washington workforce is more than 83,000 strong, but there are fears that the company’s future is elsewhere.

“If Boeing doesn’t build the 777X here, this could be the start of a long, steady decline of the company’s presence here,” said Scott Hamilton, an aviation industry consultant who figures Boeing could be gone by 2030, based on backlogs and production rates.

“Sure it can happen,” Hamilton said. “Thirty to 40 years ago, Southern California was the hub of commercial aerospace. Now, no [aerospace] company is based there.”

Boeing was responsible for $70 billion of Washington’s $76-billion aerospace industry in 2012. But unlike bankrupt Detroit, whose fortunes lived and died with autos, Puget Sound has diversified since the 1970s, when an enormous layoff called the “Boeing Bust” prompted a rueful billboard: “Will the last person leaving Seattle turn out the lights.”

Washington has taken desperate measures to ensure that its flagship employer remains key to the economy. On Nov. 5, Gov. Jay Inslee announced that he was calling a special session of the Legislature to approve a massive package of tax breaks designed to keep the 777X in Washington. “These jobs are ours,” the liberal Democrat said, “if we act now.”

Less than a week later, state legislators passed the biggest corporate tax subsidy in U.S. history — $8.7 billion.

But the lawmakers’ actions didn’t cement the deal. The machinists needed to approve a new eight-year contract with the company, but they rejected it by a 2-1 ratio.

Ryker, in her letter to Boeing’s Conner, spoke for many union members when she explained her planned “no” vote: “I have told my father … I would rather keep my integrity and be unemployed than bullied into agreeing to a contract that hurts my children in the future.”

Such sentiments were once unthinkable here. Few major U.S. cities have such a strong identification with a single corporation.

The tie to Seattle goes back to 1916, when William Boeing created a company in a small building on the shores of Lake Union and built his first wooden airplane in a boathouse. The company grew to become the world’s largest commercial aircraft maker.

Sitting in her living room one afternoon after her letter landed, Ryker pulled out a Boeing notepad and drew a long, looping cul-de-sac. Along its edge she drew 11 boxes, one for each tidy house in the Marysville neighborhood where she grew up.

She wrote “Boeing” on her childhood home and then paused before writing a “B” on six others.

“Those are all Boeing houses,” Ryker said. “And that’s just on my street.”

Ryker’s letter — which she sent to Conner, the union and the Everett Daily Herald — ran in the newspaper’s aerospace blog the day of the union vote. She has since received dozens of emails from other multi-generation Boeing workers applauding her eloquence and guts.

Comments on the newspaper website, however, skewed vitriolic; after reading a few, the young woman with the shy smile stopped.

One commenter called Ryker “a spoiled brat!” Another levied a dare: “If you are not happy with your job then quit and leave ... you did not start this business, you are not the greatest workers in the world.”

Such comments have become common as U.S. sentiment toward labor unions has deteriorated. A Pew Research Center poll two years ago showed that 45% of Americans viewed unions favorably. Union membership continues to plummet — to 11% of the U.S. workforce today from 35% in the 1950s.

Manufacturing companies such as Boeing are electing to do business in right-to-work states, where laws allow most workers to refuse to join unions even if their workplace is unionized. As a result, unions are losing bargaining power. The contract that machinists spurned in Washington is a case in point.

Under the proposed contract, traditional pension plans for newly hired machinists would be converted to a 401(k) type of retirement program in which Boeing would contribute 10% the first year, 8% the second, 6% the third and 4% for each year up to the end of the contract.

And while it currently takes a worker about six years to reach the top of a pay grade, the wait would have nearly tripled had the contract been accepted. In Ryker’s pay grade, entry-level workers make about $16 an hour, or $33,280 annually. “Maxed-out” workers such as Ryker earn $36.36 an hour, or nearly $76,000 a year.

“The hard part is, people just look at the maxed-out rate and think every Boeing employee fits that mold,” she said. “But when you start out at Boeing, people struggle. Some of the lower labor grades actually qualify for low-income housing.”

Ryker started working at Boeing as an intern when she was 17 and was hired full time at 20. But in 1999 she was laid off and spent eight years in other jobs. When she was rehired in 2007, her pay was so low her sons qualified for subsidized school lunches.

Yet a long-term Boeing career was always something to aspire to, Ryker said. Her octogenarian grandmother, Libby, is independent today in part because of the Boeing pension earned by her late husband, Tom. Ryker has asked that her family members’ last names not be used for fear of retribution.

Her sister Megan and brother-in-law Jason were able to buy a house once Jason was hired by Boeing.

“It was a really big deal for us,” said Megan, 35, who is about to graduate from Western Washington University in Bellingham. “We were on the poverty line. Now we’re solidly middle class. ... That’s why this latest contract is so upsetting.”

Boeing shares, meanwhile, have reached all-time highs — up $58.89, or 78%, to $134.25 year-to-date. Just last month, at the 2013 Dubai Airshow, Boeing said it had signed 777X contracts amounting to a record-setting $95 billion for 259 airplanes.

What happens next is unclear. In a Thanksgiving email, the union told its membership there had been no further discussions with the company. Other states hurried to take advantage of the opportunity.

Missouri Gov. Jay Nixon announced that the state’s major construction unions had agreed in an “unprecedented commitment” to a 24-hour, no-overtime work schedule if Boeing selects St. Louis to build a new jet factory. A special session of the Legislature there convened to debate an incentives package worth up to $150 million a year.

Despite this, Washington officials still hope for the best. And so does Ryker.

For now, though, they wait.

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