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Originally published September 5, 2012 at 8:55 PM | Page modified September 6, 2012 at 11:07 AM

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Bitter tone in Boeing talks with engineers

With Boeing and its white-collar engineering union, the Society for Professional Engineering Employees in Aerospace (SPEEA), just weeks away from the deadline for a new contract, the labor union's executive director says the two sides are "in open conflict."

Seattle Times aerospace reporter

Past SPEEA contracts

1999: After negotiating into 2000 and conducting a 40-day strike: A three-year contract with salary increases of 5 percent, 4 percent and 4 percent. Monthly pension benefit raised from $40 per year of service to $50 per year of service.

2002: A three-year contract with salary increases of 5 percent, 4 percent and 4 percent. Monthly pension benefit raised to $60 per year of service.

2005: A three-year contract with salary increases of 6.5 percent, 4 percent and 4 percent. Monthly pension benefit raised to $70 per year of service.

2008: A four-year contract with salary increases of 5 percent each year. Monthly pension benefit raised to $83 per year of service.

Sources: Boeing, SPEEA

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With Boeing and its white-collar engineering union just weeks away from the deadline for a new contract, the labor union's executive director says the two sides are "in open conflict."

"These are the most offensive and disrespectful negotiations I've ever been part of," said Ray Goforth of the Society for Professional Engineering Employees in Aerospace (SPEEA), which represents more than 23,000 Puget Sound employees. "It appears they don't have any intention to reach a deal."

From Boeing's side, Commercial Airplanes' head of engineering Mike Delaney says he's "taken aback" by the union's attitude and "a sea change in the relationship."

The surprisingly bitter showdown is shaping up to be a test of union power.

It comes less than a year after Boeing's other key union, the Machinists, reached a historic accord with the company that extended its contract four years and included a no-strike agreement.

In the SPEEA talks, no one — not even the tough-talking Goforth — expects a strike by the traditionally less aggressive engineering union.

But he's adamant his team won't endorse a Boeing proposal that will provide relatively modest salary and pension increases, shift medical costs to employees and, for new hires, replace the current employee pension with a 401(k) plan that will lower retirement benefits.

If SPEEA members reject the proposed contract, Boeing will be forced back to the bargaining table.

But if the members end up largely accepting Boeing's terms, the union's leadership will be seriously weakened.

The contract covers SPEEA's local Boeing workforce plus about 300 more at smaller plants in Portland and in Utah.

Two-thirds are engineers who oversee the design, manufacturing and testing of airplanes. Their average salary is $110,000.

The remaining third are technical professionals who act as a crucial interface between the engineers and the mechanics who work on the jets. Their average salary is $79,000.

Goforth said his members in Everett and Portland are particularly angered by what they've heard of Boeing's proposals. And last week a band of some 50 SPEEA members expressed their displeasure by marching through the Renton assembly plant chanting union slogans through bullhorns.

Boeing posted a $4 billion profit last year and business is booming. Yet Delaney said the company must keep compensation in check as it faces the prospect of increased competition in the future.

Although Boeing hasn't disclosed many key details of its offer, he acknowledges that the company proposes to increase salaries and pensions at a slower rate than past contracts, and some medical costs will shift to employees.

In 2008 the union won annual salary increases of 5 percent each year for four years.

This time, said Goforth, Boeing is offering only around 3 percent each year, or roughly the rate of inflation last year. (The union asked for 7.5 percent increases each year.)

In addition, a key Boeing proposal would switch new hires from the pension plan that current employees have to a 401(k)-type plan that SPEEA says will deliver up to 40 percent less upon retirement than the current Boeing pension.

Boeing concedes that the contributions will be set such that the comparative value of the pension is reduced from the current level, which is 70 percent higher than the average U.S. pension in the engineering field, to just 13 percent higher than average.

Delaney said that's enough to give Boeing the edge he needs to hire top engineers.

"We are trying to live in that sweet spot where we are market-leading, but we're not ... so far out of the national average," he said.

To Goforth, the retirement plan for new hires — which was outlined by the company in a negotiating session July 26 — is a nonstarter.

"They dropped a proposal we'd been telling them for more than a year we could never accept," Goforth said. "They set fire to a year's worth of bridge-building."

To him, the proposal is transparently a "take-away" from the current union contract.

Such is the hostility between the parties that even the way the discussion played out is in dispute. Delaney said his team laid out nothing new in that July 26 meeting.

He said management told SPEEA in November that it needed to rein in compensation growth and that restraining the pensions for new hires was "the single most important thing on our agenda."

Delaney said Boeing's stance is necessary to keep the company competitive and that the company will, nonetheless, remain a leader in the compensation it offers.

"When we're done, my team's compensation will be increasing," Delaney insisted. "There will be no take-aways."

One extended strike

SPEEA has had only one extended strike in its 66-year history.

In 2000, the union struck for 40 days, a landmark event in the union's history that was pitched at the time as a struggle to get "respect" from the company's bean counters.

In the current wrangling over the new contract, Goforth has pointedly recalled that episode by several times accusing Boeing of having a lack of respect for his members.

He said he takes the absence of communication from new Commercial Airplanes Chief Executive Ray Conner as "a sign of disrespect." He sees disrespect also in Boeing's unwillingness to give his team a full contract offer right away.

Delaney flatly rejects that notion, and suggests Goforth is attempting to resurrect the feelings of 2000.

"The engineering team is in such a different place than it was in 2000," Delaney said.

Then, Boeing corporate wasn't investing in new airplanes. The company's engineering future looked bleak, he said.

Today, chief project engineers are vice presidents with a say in strategic decisions. Boeing leaders in recent years have repeatedly praised the engineering culture as the cornerstone of the company.

And the engineers have years of work ahead developing the 737 MAX, the 787-10, the 777X and later a replacement for the 757.

Delaney said he's convinced the total Boeing offer is good enough to allow him to attract and retain all the talent he needs to develop those airplanes.

How these negotiations end depends on how SPEEA's members — highly paid, middle-class professionals — view themselves and the company.

"Other unions are much more political, centered around a class identity," said Goforth. "Ours is focused around their professional identity and their place in the industry."

Boeing still has not laid out full details of its proposed contract. The current contract expires Oct. 6 and Boeing says it will give its complete offer by mid-September.

As engineers, SPEEA members typically use spreadsheets to sort through the spin from both sides and analyze the proposal's pros and cons as applied to their personal circumstances.

Once Boeing gives its offer and SPEEA's leadership has had time to analyze it, union members will vote the initial offer up or down in a two-week, mail-in voting process.

Dominic Gates: 206-464-2963 or dgates@seattletimes.com

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