Boeing machinists approve contract that secures production of 777X in Seattle

SEATTLE (REUTERS) - Boeing machinists have narrowly approved a crucial labour contract that secured thousands of jobs and billions of dollars of economic activity for Washington state but will cost workers their pensions.

The vote of 51 per cent to 49 per cent to accept the deal means Boeing Co will build its new 777X jetliner and wings in the Seattle area, where Boeing has built aircraft for more than 90 years.

Had the workers rejected the offer, Boeing had said it would consider making the successor to its popular 777 widebody jet elsewhere and had received offers from 22 states interested in hosting the new factory.

"This decision means Boeing hopefully will stop pursuit of another site for its 777X program," said a somber Jim Bearden, administrative assistant to machinist District 751 President Tom Wroblewski.

"They held a gun to our head and our people were afraid," said Mr Lester Mullen, a District 751 council delegate who works on the current 777 wing production line.

The decision had opened deep rifts between the local International Association of Machinists and Aerospace Workers (IAM), which opposed the contract, and its Washington D.C.-based leadership, which forced a vote on the proposal. It had also revealed cleavages between younger workers open to the deal and older workers dead set against it.

In November, two-thirds of machinists voted against a similar offer that would have replaced their traditional defined-benefit pension with a 401(k)-style savings plan, one of two retirement plans the workers receive.

The union's national leadership negotiated that deal, which would have extended the contract eight years beyond its current expiration in 2016. But local leaders opposed it, saying the take-aways were too great.

On Friday, the members approved an eight-year extension that the union said provided US$1 billion (S$1.3 billion) in additional benefits beyond the prior offer, but that will halt pension contributions in 2016.

In clinching the agreement, Boeing secured the factory location favored by analysts and investors, who saw far lower risk in using the existing facilities and experienced workers.

Boeing also ensured that the machinists won't have an opportunity to strike until 2024, when the new contract expires.

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