US aerospace giant Boeing said it was reviewing site options to build its new 777X airplane after a key union rejected a contract extension at its Seattle base.
The International Association of Machinists & Aerospace Workers District 751 voted late on Wednesday to turn down Boeing’s proposal to extend by eight years the current contract that expires in 2016.
The contract extension notably would have reduced retirement benefits and provided a one percent pay raise every other year, in exchange for the long-term stability of production of the new long-range, twin-aisle plane.
A solid 67 per cent of the roughly 31,000 members of the IAM machinists union who work for Boeing in the Seattle area of Washington state rejected the deal.
Boeing had argued that the contract extension would allow the company to maintain thousands of jobs in the Puget Sound area, home to its biggest aircraft plant in Everett, where the 777 family of airplanes is built.
“We are very disappointed in the outcome of the union vote,” Ray Conner, Boeing Commercial Airplanes president and chief executive, said in a statement.
“Our goal was two-fold: to enable the 777X and its new composite wing to be produced in Puget Sound and to create a competitive structure to ensure that we continue market-leading pay, health care and retirement benefits while preserving jobs and our industrial base here in the region,” he said.
“But without the terms of this contract extension, we’re left with no choice but to open the process competitively and pursue all options for the 777X.”
IAM representative Tom Wroblewski said the union had preserved members’ pensions, “something sacred” that will help members retire with more comfort and dignity.
“It is my belief that we represent the best aerospace workforce in the world and hope that as a result of this vote Boeing will not discard our skills when looking to place the 777X,” Wroblewski said in a statement.
Boeing, headquartered in Chicago, signalled that the union rejection had shut the door to further negotiations.
“There are no plans to re-engage with the union regarding contract negotiations until prior to the current contract expiration in 2016,” Boeing spokesman Doug Alder said.
The spokesman declined to identify the potential 777X locations.
In late October, another Boeing spokesman, Marc Birtel, said that the company would design its new 777X aircraft at five US sites and in Moscow, Russia, but had made no decision about using its key Washington state facilities.
Much of the detailed design will be carried out by Boeing engineering teams in Charleston, South Carolina; Huntsville, Alabama; Long Beach, California; Philadelphia, Pennsylvania; and St. Louis, Missouri, the company told employees in an internal memo.
The 777X is Boeing’s working name for its planned newest member of the 777 family. It plans to launch the 777X this year, with entry into service with launch customer Lufthansa expected around the end of the decade.
Shares in Dow member Boeing closed 1.4 per cent higher at $135.09 in New York trade.