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Boeing turning to states for 777X

Arkansas pitch seen for factory

By DEMOCRAT-GAZETTE STAFF AND WIRE REPORTS

This article was published December 14, 2013 at 3:02 a.m.

Boeing Co. said Friday that it is reviewing 54 sites in 22 states, including Arkansas, for a production facility for its 777X aircraft after labor talks ended with its largest union rejecting a new company proposal for contract concessions.

Machinist leaders turned down Boeing’s conditions for keeping work on the jet in the company’s Seattle commercial hub, the plane maker said. Boeing’s plan, a response to a Wednesday union proposal, called for freezing pensions in 2016 and shifting employees to a 401(k)-style retirement program.

“We’ve listened to the union leadership and had an open dialogue in hopes of moving toward each other,” Ray Conner, chief executive officer of Boeing’s commercial aircraft unit, said in an emailed statement. “Unfortunately the offer, which would have ensured this great airplane for the Puget Sound region, was immediately rejected by the union leadership.”

With discussions concluded, Chicago-based Boeing is shifting focus to the proposals from states vying to host assembly of its newest wide-body jet, carbon-fiber wing and other parts, said Doug Alder, a spokesman. With the exception of some 787 Dreamliners built in South Carolina, Boeing produces all of its commercial planes in the Seattle area.

Boeing is reviewing 54 potential sites, since many states submitted multiple locations for consideration. The company plans to move quickly to winnow the list, making a decision on a 777X venue early next year, Alder said.

Asked whether a site in Arkansas is under consideration for the Boeing plant, Scott Hardin, a spokesman for the Arkansas Economic Development Commission, said, “[The commission] can’t comment on projects currently in progress.”

A spokesman for Boeing did not return a phone call seeking comment.

Michael Pakko, chief economist at the Institute for Economic Advancement at the University of Arkansas at Little Rock, said it is not surprising that Arkansas would be interested in landing such a facility.

“I don’t know how many jobs would be involved permanently, but of course there would also be the benefits of construction employment,” Pakko said.

The idea of a large aircraft manufacturing plant locating in Arkansas isn’t as far-fetched as some might think, said Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville.

“There are pieces of [the aviation industry] cluster already here,” Deck said. “If we were able to be a finalist or a competitor [for the Boeing plant], it would strengthen us in an area where we already have a bit of an advantage.”

In its own bid to win the 777X jobs, Washington state recently approved tax breaks for Boeing valued at $9 billion over the coming years, along with legislation to improve aerospace training programs and the permitting process.

Boeing began offering the 777X in May and plans to deliver the first aircraft by the end of the decade. Boeing has said it is expected to carry as many as 400 passengers and be more fuel efficient than the current 777.

At the Dubai Airshow last month, Boeing received orders for 225 such planes from three airlines.

Machinists couldn’t accept the plane-maker’s proposal this week because “the price Boeing demanded was too high,” said Tom Wroblewski, president of the union’s District 751. “Our senior leadership team could not recommend Boeing’s counteroffer.”

The Seattle Times, citing union negotiator Rich Michalski, reported later that the machinists may still put Boeing’s proposal to a vote.

The union had offered Boeing a preliminary proposal that would have extended the current contract until 2024, Wroblewski said in a statement on the machinists’ website. Boeing’s counteroffer “was mostly unchanged from the proposal that Machinists had rejected” on Nov. 13, he said.

Shares of Boeing rose 87 cents Friday to close at $133.83.

Labor relations, which were chilled after machinists overwhelmingly rejected 777Xrelated concessions demanded by Boeing last month, seemingly thawed this week as the company fielded proposals from California to North Carolina offering billions of dollars in incentives to land jet manufacturing that would create thousands of jobs.

Conner met with Wroblewski on Tuesday, the day that state bids were due, and the union followed up Wednesday with proposed changes to the contract expiring in 2016. Two-thirds of members voted on Nov. 13 to reject an eight-year extension proposed by Boeing that would have frozen pension plans and slowed how quickly workers advance to maximum hourly wages.

While the union didn’t divulge details of this week’s offer, Wroblewski described it as meeting “the needs of our members, while also ensuring the long-term success of the Boeing Co. in Washington state,” according to a statement Wednesday.

Boeing said union leadership Thursday rejected its “best and final counter proposal,” which included $15,000 in bonuses per member, increased dental benefits and an agreement to keep the current wage structure that allows workers to advance to the top of the pay scale in about six years.

Information for this article was contributed by Julie Johnsson of Bloomberg News, Mike Baker of The Associated Press and David Smith of the Arkansas Democrat-Gazette.

Business, Pages 29 on 12/14/2013

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