On October 1st, Boeing announced that it would move all 787 production to South Carolina. It was announced as a required "cost-cutting" measure due to the tanking economy and the fall-out from Boeing sending 346 people to their death in plane crashes in Indonesia and Ethiopia – crashes caused by prior "cost-cutting" measures undertaken by the company.
The move will eliminate thousands of good-paying jobs at Boeing's Everett plant and eliminate many thousands more less well-paying jobs at the supplier and logistics companies in the surrounding area. This is on top of the thousands of people Boeing has already laid off in the wake of the 737 MAX debacle. In short, what we are seeing is the beginning of a potential regional economic tailspin that hasn't been seen in the Puget Sound since the "Boeing Bust" in 1969. Only this time, the working class will be embraced by the tender mercies of the neoliberal state rather than the New Deal social programs of the late 1960s.
Over the last twenty years, Boeing has extorted more than $12 billion from this state in corporate subsidies and has repaid that debt by cutting thousands of jobs and eviscerating the machinists union (IAM Local 751). And now, it looks as if the region will have nothing to show for it. How Washington got to this point is the story of capital's complete control over state institutions and the public purse strings and the parallel collapse of the American labor movement.
The 2008 Wildcat Strike
In September of 2008, Boeing tried to push a contract on IAM Local 751 – the machinists union at Boeing that does everything from actual machining to assembly in the Puget Sound plants – that would significantly lower the wages of new-hires and cut healthcare benefits.
The cuts to new-hire wages was a backdoor route to what Boeing really wanted to do which is install a formal two-tier wage system in which new-hires get brought in on a different, lower wage contract and legacy workers are grandfathered in on a higher wage contract. It is a classic union busting ploy that allows the company cut wages by running off older workers and then weaken the union by pitting younger, lower-paid workers against their legacy co-workers.
This technique of divide and conquer has devastated the United Auto Workers all across the Midwest, but Local 751 was a particularly militant union that was not afraid to strike. 87% of union workers voted to reject the contract and go on strike.
Unfortunately for the militant local, the IAM leadership – particularly at the national level – were strict adherents to a strategy of "business unionism" – the idea that there is no such thing as class conflict and so workers and capitalists can simply work together. Immediately following the strike vote, IAM negotiator Mark Blondin and district president Tom Wroblewski told a group of union members that there would be no strike. Behind the back of the membership they had agreed to a proposal from Washington Governor Chris Gregoire – who was fairly openly negotiating on Boeing's behalf at this point – to be whisked away to Disney Resorts in Florida for a negotiation with Boeing "mediated" by Gregoire.
It is worth spending a second on the insanity of this. The union negotiating team was going to fly to Disney World in the middle of a negotiation where they could be strong-armed by the state's governor and one of the largest corporations in the world – all safely on the other side of the country, away from the prying eyes of their membership. The union hall erupted at the announcement. Blondin and Wroblewski were pelted with water bottles, fleeing the stage and locking themselves in the staff offices.
Over the next day, IAM workers refused to work. Some led marches around their plants, others set up informal pickets outside of the gates. One plant worker in Auburn recalled a desperate manager asking a machinist to complete a "hot job" and the machinist replying that if he wants the job done, he should "ask the governor to do it." By the time the negotiating team came back to Washington – mouse ears presumably packed away out of sight – they had to accept the reality in front of them. The workers were on strike whether the leadership wanted it or not.
The strike would last two months. During this time it was subject to a media assault as local papers and news broadcasts became bullhorns for Boeing. The IAM leadership leaned on the workers as well, trying to get them to "work with the company." The final contract maintained many of the poison pills of the original: cuts to new-hire pay and no freeze on the use of outside non-union vendors. Boeing argued that the contract preserved the status quo and the IAM negotiators boasted that they saved 5,000 jobs. Two months later, Boeing announced that they would layoff 10,000 workers.
The Largest Corporate Give-Away in History
In the summer of 2009, Boeing bought the Vought Aerospace plant in South Carolina. It was the first piece in Boeing's plan to move production of the new – still unbuilt – 787 Dreamliner to a non-union state. This was in direct contradiction of the gentlemen's agreement that Boeing had reached with Washington State in 2003, when the legislature voted to give Boeing $3.2 billion to keep the proposed plane's production in Washington.
It was the largest corporate give-away by any state in American history. Of course, no actual strings were attached to the money, meaning that Boeing basically used the massive payout to buy the $750 million Vought plant and prepare the ground for its move out of Everett. In a leaked memo, CEO Jim McNerney stressed the importance of low wages to Boeing, saying that due to increased international competition the company should not go the way of the auto industry by "promising unsustainable wage increases and benefit levels" and agreeing to contracts with layoff protections.
The IAM asked the National Labor Review Board (NLRB) to investigate the move as an act of retaliation against Local 751. This was no idle speculation on the part of the union. Jim McNerney had confirmed on a conference call discussing the Vought deal that it was being done to prevent strikes. Months later, Jim Albaugh, CEO of Boeing's commercial division, confirmed in the Seattle Times that preventing strikes (meaning breaking the union) was the key factor in deciding to move to South Carolina. While the NLRB was investigating the case, Ray Conner, another Boeing exec, again stressed in public that the move to South Carolina was to break the union and that they were expanding production in the non-union plant to smooth over future "production disruption."
Republicans in the Senate and House attacked the NLRB for taking up the IAM's complaint, threatening to kill the appointment of NLRB general counsel Lafe Solomon over the dispute with Boeing. For the most part Democrats sat in quiet approval of the attacks. Obama Commerce Secretary nominee John Bryson stated that he thought the decision of the NLRB to bring the complaint forward was a "big mistake" in his Senate confirmation hearings. Bryson was a former Boeing board member, as was Obama Chief of Staff William Daley.
"Companies need to have the freedom to relocate, and they also need to follow the law," President Obama stated in typical fashion at a press conference, "What defies common sense would be a notion that we would be shutting down a plant or laying off workers because labor and management can't come to a sensible agreement." He then parroted Boeing CEO Jim McNerney, "We can't afford to have labor and management fighting all the time, at a time when we're competing against Germany and China and other countries that want to sell goods all around the world."
Ultimately, due to the obvious nature of the case, the NLRB ruled in the IAM's favor. But before any discussion of sanctions could get going, Boeing entered into secret negotiations with the IAM. In exchange for withdrawing their complaint from the NLRB and for a five year no-strike pledge, Boeing would raise wages in the current contract. The case was pulled and Obama was saved from political embarrassment. (Though the Boeing case has been used as a cudgel to gut the NLRB ever since).
The Largest Corporate Give-Away in History (part 2)
In late 2013, Boeing demanded that the IAM open up their contract for renegotiation. Two years after they cut a deal with the IAM to withdraw their complaint from the NLRB, Boeing wanted wage cuts, health care cuts, and to get rid of pensions. As a club, they held production of the 777X over the heads of workers and the state. Boeing was very clear, if Local 751 did not eviscerate their contract, Boeing would move out of state.
The union had been weakened since 2008. Top leadership condemned the local for striking. "It is time to move beyond the old ways of bargaining that have been used since the 1930s," IAM President Tom Buffenbarger stated in 2010. "We must find ways to move forward where both the company and the workers benefit together, neither one profiting at the expense of the other in adversarial roles." New hires, brought in at lower wages, were encouraged to take it out on legacy hires. And the entire media apparatus was in agreement that Boeing must be appeased at all costs.
Still, the Local voted 2 to 1 to reject Boeing's new contract. Rollback was in the air, however, and no sooner had the machinists voted down the contract than Boeing began scheming with the top leadership of the union to ram the contract down the Local's throat.
After walking away from renewed contract negotiations Boeing met with top union officials to plot a new vote. On the first day of the "winter break" – a long holiday won in previous contract fights stretching from December 25th to January 1st – the top IAM leadership announced that there would be a new contract vote on January 3rd. The announcement was timed to reach as few members as possible and the vote was calculated to ensure a low voter turnout as many workers, particularly more militant older workers, use vacation time to extend their holiday.
The contract was the same deal that the membership had voted down 2 to 1 in November. But this time the media, local politicians, and the IAM leadership launched a coordinated full-court press to get a "yes" vote. Radio and TV ads, editorials, and mayoral press conferences all told workers that if they voted no again, they would ruin the lives of their children and destroy the economy of the Puget Sound and Washington State forever.
Voting procedures were changed by the IAM leadership. Special eligibility cards were required, but many at the Everett plant, which has 17,000 union members, never got them in the mail. They were forced to wait in long lines, in the cold, at the understaffed union hall to obtain "good standing" cards. Counting of ballots was moved from the centrally located Seattle union hall to the various local union halls making it more difficult to monitor. Clearly the fix was in.
On January 3rd with 25% of the membership absent, the contract passed by a razor thin margin of only 600 votes. Members sobbed openly in the Seattle union hall while others cried "Bullshit!" and one demanded the Local leave the IAM. Boeing had forced two contract votes: one in which workers showed up in mass and voted down the contract 2 to 1 and another in which voting procedures were inexplicably changed and voter turnout was systematically suppressed leading to a razor thin yes vote. You can guess which vote counted.
Under this new deal members lost their pensions, conservatively estimated to reduce retirement savings by 40%. Pay increases were reduced from 2% per year, barely keeping up with inflation, to 1% every two years, a reduction of 75%. The health care plan was reduced. Wage scales were frozen, meaning that by the time the contract expires in 2024 the bottom three labor grades will be minimum wage jobs. And to top it off workers forfeited their right to strike for a decade.
Boeing had openly used a threat to move work out of state to force a contract renegotiation and extort enormous concessions out of Local 751 – concessions that have likely permanently crippled the union. Yet this time, the National Labor Review Board – chastened in the aftermath of its 2011 decision – sat silent.
Boeing demanded additional concessions from its suppliers asking for an across the board 15% price cut. There are an enormous number of shops in the Puget Sound area that fill out the Boeing supply chain. These shops are overwhelmingly non-union, doing work that union workers used to do for Boeing directly. While nominally independent, Boeing places demands on these shops that prevent many of them from doing business with other companies, essentially creating a feudal relationship between the shop and its lord, Boeing. Demanding price cuts from their suppliers, Boeing effectively lowered the wages of thousands in the Puget Sound.
At the state level, politicians fell all over themselves to give Boeing whatever they wanted. The director of the Office of Financial Management under Governor Jay Inslee, David Schumacher, immediately set about drawing up a massive transfer of wealth from Washington tax-payers to Boeing's pockets. The plan would give Boeing $8.7 billion in no-strings attached public money. It was a sweetheart deal, so it was not surprising to find out that prior to working for Inslee, Schumacher had been a lobbyist for Boeing.
It remains the largest state payout to a private company in American history. Over the next three years, Boeing laid off 15% of its workforce in Washington State, a loss of more than 12,000 jobs. "We gave aerospace and Boeing the largest tax break in US history," a spokesman for SPEEA, the engineers union at Boeing, told the LA Times, "and we're the only state that didn't tie the break directly to jobs."
Where Does All That Money Go?
In 2015, Boeing made headlines again, it was the first year in more than a decade that the company paid taxes. In the previous five years, Boeing had made $26.4 billion in profit and paid zero in taxes, in fact, it was granted more than $400 million in tax refunds. Total subsidies from Washington State alone amount to $12.5 billion in free money to Boeing since 2003. So where does all the money go?
Well it certainly doesn't go to producing better planes. An article from last year in The New Republic revealed that Boeing has been skimping and cutting corners in research and development for decades – leading directly to the deaths of 346 people on doomed Boeing planes. In the Seattle Times, columnist Jon Talton – no friend to organized labor – summarized Boeing's move to South Carolina like this:
There was no aerospace cluster in the Low Country around North Charleston. Only about 400 employees. But Boeing executives in Chicago saw a chance to stick it to the unions in the Puget Sound region. The second Dreamliner assembly was born. Perhaps not surprisingly, its airliners have been plagued with manufacturing defects.
That was the "thank you" to the unionized machinists and engineers here who saved Chicago's bacon when the bean-counting regime of Jack Welch protégé Jim McNerney put the 787 behind schedule and plagued it with problems.
It should be noted that the "aerospace cluster" in the Puget Sound was not created by random accident. Decades of good union jobs built up the skills-base here and gave workers the ability and confidence to speak out at work. By contrast, when Boeing workers in South Carolina voted to join the IAM in 2018, the company appealed the vote to the NLRB. The NLRB overwhelmingly rejected the workers' right to form a union, citing that they "did not have enough in common" to form a union. It should be no surprise that the South Carolina site has been rife with mishaps and FAA violations, as well as a code of silence enforced by management.
In a 2017 article covering anger at the latest round of layoffs, the LA Times got closer to the mark on what Boeing is doing with all that money:
The outrage comes partially from Boeing's habit of forcing its workers to shoulder the pain of management's inability to compete more effectively with Airbus, its European chief rival in the airliner business. Last December, the company blamed that competition for a sharp slowdown in orders for its 777X airliner, a mainstay of Washington State production lines, which it said would mean a hit to the workforce. But the very same day, the company announced a 30% increase in its quarterly dividend and a new $14-billion share repurchase program. Chairman and CEO Dennis Muilenburg crowed that those initiatives signified Boeing's determination to "meet our commitment to provide competitive returns to our shareholders."
What we have seen over the last 30 years is a massive upward redistribution of wealth from the public to Boeing. Boeing then uses that money to engage in stock buy-backs that turn corporate money into privately held wealth. In a state like Washington, which has the most regressive tax code in the country, this means a direct transfer of wealth from the poorest people in the state to the wealthiest people in the country. A wealth transfer that amounts to billions in stolen money.
It is astonishing that with an ongoing heist of this magnitude, the only person to cover it in the Puget Sound has been a single columnist at an alternative weekly paper. Astonishing until we understand that what Boeing is doing is simply applying the logic of capitalism to the world around them. Capital, vampire-like, lives only by sucking the life out of everything around it.
What does this mean for the Puget Sound? "Seattle finds itself where Pittsburgh was in the 1970s and Detroit in the 1960s. The city is about to lose a central part of its industrial base," Charles Mudede writes in a recent column. "Seattle will finally become fully post-industrial in the third decade of the third millennium." Mudede sees Seattle moving on as a tech hub with no industrial base, in short, a city of great and growing inequality.
And what about those exurbs (Everett, Renton, Auburn) where Boeing has made its home over the last 30 years? It is likely that Everett, former home of 787 production, will be hollowed out by the loss of thousands of good-paying union jobs. Maybe laid off Boeing workers will find new work in the low paid service industry, or maybe they won't find anything at all. But the inequality between the urban core, Seattle, and its exurbs will grow ever larger.
And for the media and politicians? They will argue that the union was the problem and that the state was not "business friendly" enough. They will claim that there was a way to satiate Boeing's vampire-thirst for profit. They will chastise the working class for not sacrificing enough to keep Boeing. After all, the capitalist class only wants one thing in this world, and that is everything.