Boeing and the International Association of Machinists and Aerospace Workers have reached a landmark provisional deal 10 months ahead of the union's contract expiration to build the re-engined 737 Max in Renton, Washington, pending the adoption of a new four-year contract.
The sweeping deal comes after weeks of secret negotiations. The company's largest union, which went on a 58-day strike in September and October 2008, has started talks well ahead of the contract's September 2012 expiration.
The union leadership has recommended its members approve the new four-year contract, which includes a $5,000 ratification bonus, a 2% cost of living wage increase each of the four years on the contract, pensions for new hires, new health care plans and preservation of medical benefits for retirees.
"Boeing has assessed the business case for locating production of the 737 MAX in Renton in light of the economics of a proposed new labor agreement and the company is prepared to locate 737 MAX production in Renton provided the economics contained in that proposal are achieved," said Boeing.
The contract must be ratified by a vote of IAM union members on 7 December.
Boeing has conducted 737 final assembly operations in Renton, Washington, since the 1960s and the 737 Max is slated to enter service with a new CFM International Leap-1B engine starting in 2017.
The deal secures the current parts manufacturing and unionised shops in nearby Everett for wiring and interiors as well, as Boeing is accelerating its narrowbody production from 31.5 737s per month to 42 in the first half of 2014.
Further, once the contract is ratified, the IAM leadership will recommend to the Obama Administration that the US National Labor Relations Board complaint against Boeing's second 787 final assembly line in North Charleston, South Carolina be dropped citing a settlement of grievances between the company and the union.
The IAM and the NLRB had alleged Boeing selected Charleston for the second 787 line as a retaliatory move for the 2008 strike.