Analysis: Machinists vote helps Boeing avoid hiring crunch

Sat Jan 4, 2014 8:38pm EST
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By Alwyn Scott

NEW YORK (Reuters) - In clinching a deal with its machinist workers on Friday that will keep jetliner manufacturing in the Pacific Northwest, Boeing Co (BA.N: Quote) may not only have secured industrial peace until 2024 and brought its pension costs under control - it has also avoided facing a recruitment nightmare.

Thousands of machinists in Seattle and Everett, Washington, and Portland, Oregon, voted by a slim margin to approve a contract extension that guarantees Boeing's new wide-body passenger jet, the 777X, will be built by them in the region. The result was announced late on Friday night.

Had the workers rejected the deal, Boeing was considering 54 alternate locations in 22 states for a $10 billion factory that would eventually employ 8,500 people.

But had Boeing moved the location, it would have faced intense competition for workers - chiefly machinists and engineers - that has crimped the U.S. aerospace and defense industry for years.

The shortfall helps explain why Boeing kept negotiating even after an earlier offer was rejected by the machinists and as it courted other states.

The industry is undergoing a historic boom in aircraft production at a time when a major wave of workers is ready to retire. More than one million engineers, for example, about 30 percent of the U.S. industry's total engineering work force, will be eligible to leave in the next five years, according to a study by Deloitte.

"The number one challenge right now is work force," said William Hosack, chief executive of Singularity Prime, a Connecticut-based consulting firm that works with aerospace manufacturers and suppliers.

A new jet assembly plant Boeing's rival, Airbus, plans to open in Alabama next year is adding to the competition. Not only does the Airbus factory need machinists like those Boeing has in Washington state, but the plant's future suppliers also are looking for workers, he said.   Continued...

Ballots are pictured at the International Association of Machinists and Aerospace Workers (IAM) District Lodge 751 headquarters in Seattle, Washington January 3, 2014. REUTERS/David Ryder