Everett, Wash.
Published: Monday, October 27, 2008

Sticking point for SPEEA? Outsourcing

With contract talks set to open on Tuesday, Boeing's engineers and technical workers and the company disagree on the effectiveness of Boeing's of global-partner model.

By Michelle Dunlop
Herald Writer

 EVERETT -- How angry are Boeing engineers over problems created by the outsourcing of work on the company's latest jet?

The answer to that question may determine whether Boeing engineers and technical workers hand the aerospace company its second labor strike this year. Negotiators for Boeing and the Society of Professional Engineering Employees in Aerospace begin intense contract talks Tuesday.

"People never go on strike because of an extra buck an hour or because of an extra $10 (health insurance) co-pay," said Ray Goforth, executive director of SPEEA. "People go on strike because some deep emotional trigger has been pulled."

For the roughly 20,500 SPEEA members in the Puget Sound region, that trigger is respect. The engineers and technical workers last walked out on strike, in 2000, because many felt the company didn't respect them -- not in pay, bonuses or health coverage.

While wages and health benefits will factor into the contract negotiations beginning on Tuesday, the larger issue will be over whether Boeing listens to SPEEA's concerns about outsourcing in the wake of Boeing's numerous setbacks on its 787 Dreamliner program.

"My fear is that all the emotions are going to pour out if Boeing gives us a contract with any takeaways," Goforth said.

SPEEA members aren't yet frustrated that they have to work overtime, Goforth said. But members are frustrated they're having to fix supplier errors that could have been avoided if the company had listened to SPEEA's concerns.

Mike Denton, Boeing's vice president of engineering, said the company had good intentions when it placed work with global partners.

"There are elements of the partner model that have been really good for us," Denton said.

Besides offloading some of the financial risk associated with developing a new aircraft, Boeing saw using a partner model as a means of leveling out employment. With previous new jet programs, Boeing would hire new engineers for design efforts only to lay them off once the airplane had entered service.

The practice was tough on employees and managers. It also made Boeing less attractive to those just entering the work force.

But Boeing's reliance on global partners to bear costs, production and design work has put the 787 in jeopardy. The fuel-efficient jet already was 15 months behind schedule when Boeing's Machinists went on strike Sept. 6.

"The partner model did not get executed the way we wanted," Denton said.

As a result, Boeing employees -- its SPEEA members -- had to fix design mishaps on the 787. The problem was so great that Boeing kept engineers on the 787 rather than transferring them to the 747-8 program. The company had to bring in contractors to get the revamped jumbo jet program going.

"That causes some anxiety," Denton said.

But Denton is quick to point out that Boeing has hired at least 4,000 new engineers and technical workers since hitting a low point in 2003. And Denton disagrees with Goforth's assertion that the engineers don't feel respected by Boeing.

"The team is highly valued," Denton said. "They're a really important piece of the company."

The troubles experienced by Boeing on the 787 has led the company to come to the conclusion that it likely will need to do things differently with its next all-new aircraft program, Denton said.

"We really think we need to own some part of major production," he said.

But that doesn't ease Goforth's concerns. In preliminary contract talks, Boeing has been unwilling to give any guarantee that it will consult with SPEEA members when the next airplane program comes around.

In fact, Goforth hasn't found many of SPEEA's preliminary talks with Boeing comforting. Late last week, however, Goforth said the two sides made "a little bit of progress" in discussing benefits.

SPEEA has proposed a new plan for health insurance and is asking for up to 10 percent per year in wage hikes. For the product the engineers produce, SPEEA's leaders say Boeing should pay market-leading wages.

"Some elements of what we offer will be better than any company's. Some elements are not. But the total package is as good as anybody's," Denton said.

Goforth believes there's a 50 percent chance his members will strike. Boeing's Machinists are still striking.

"The Boeing Co. is an island of prosperity right now," Goforth said. "This is the time when they should be seeking ways to share the success. There should be no takeaways."
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