Business

<< Previous   of   Next >>   ADVERTISEMENT   CONTACT THE HERALD Mike Benbow, Business Editor benbow@heraldnet.com   Published: Sunday, August 31, 2008 A strike wouldn't hurt just Boeing By Michelle Dunlop, Herald Writer EVERETT -- What will it take to avoid a labor strike at the Boeing Co.? That's the question on many Snohomish County residents' minds after leaders of the company's largest union urged members to reject Boeing's contract offer and to strike. That question is quickly followed with "Will Boeing meet the union's demands?" The 24,000 members of the International Association of Machinists and Aerospace Workers will head to their union halls Wednesday to vote on Boeing's offer. Union negotiators say the three-year contract offer fell short in terms of wages, medical benefits and job security. Boeing leaders have said this is their best and final offer. The Machinists last went on strike in 2005 for 28 days. A monthlong Machinists strike could take more than $100 million in paychecks out of the county's economy, said Donna Thompson, a local labor economist. That's the same figure some analysts have estimated that a strike could cost Boeing daily in fines and lost sales. With a strike, the union members and the company aren't the only ones to suffer -- a fact both Machinists and Boeing leaders have acknowledged. "The discretionary spending is the first thing to go," Thompson said of the union members. Machinists won't be "out buying flat-screen TVs or cars" when they're on strike, she said. Instead, they'll cut down to the basics: mortgage or rent payments, groceries, gas. The longer a strike drags out, the worse it will be for local businesses. Long-standing Machinists have seen strikes come and go -- they're prepared for what a work stoppage can do to their family budget. But new Machinists, making entry-level wages, will be hit hardest. A Machinist hired in at $10.72 an hour, with an average of roughly 22 hours of overtime monthly, makes just over $2,065 each month. The Machinists offer $150 weekly in strike pay after the third week. Machinists district president Tom Wroblewski told reporters that his members are willing to take on the hardship of a strike in order to get what they want. "Overwhelmingly, our members are opposed to this contract," Wroblewski said. Contract history and strategy "From the union's perspective, they gave back in the last two contracts," said Scott Hamilton, analyst with Leeham Co. The Machinists did not receive general wage increases and made concessions on outsourcing in contracts signed in 2002 and 2005. This time around, the Machinists say they have the leverage to make gains. Boeing got an early start on negotiations this year. In May, it presented many proposals that members considered as "takeaways." The company said it wanted to remove Wichita Machinists from the bargaining unit, swap out the traditional pension for a 401(k) type retirement for new Machinists and eliminate early retiree medical benefits for new employees. Those takeaways enraged members, Wroblewski said. Although Boeing eventually scratched those proposals, its approach of communicating more directly with members equally enraged union leaders, who filed an unfair labor practice complaint against the company. For its part, Boeing denies violating labor practices. But company leaders want employees to understand the offer, posting updates on Boeing's Web site and devising a pay and benefits calculator for Machinists. Wages Boeing proposed an 11 percent wage increase over the life of the contract. It also offered a $2,500 signing bonus and a lump sum payment of 6 percent of a member's salary, including overtime, with a minimum of $2,500 in the first year. The average Machinist would receive a lump sum payment of $3,900, Boeing's Tim Healy said. The average Machinist makes $54,500 annually, $65,000 after overtime, he added. But thousands of new Machinists make much less. The Machinist making $10.72 an hour makes $26,600 annually, including overtime. Although Boeing's offer includes a bump of $2.28 an hour for entry-level wages, the union says that doesn't fairly reward the Machinists who are in between the minimum and the maximum in their pay grade. They would receive a 50-cent hourly increase every six months, Healy said. Still, Hamilton said, "It's hard for them to see and hear (of Boeing executives' salaries and pension) and be told, 'we can't do any better.'" Outsourcing The Machinists say that their proposal essentially prohibited Boeing from laying off union members as the result of the company's subcontracting. "The IAM is proposing changes to provisions of the contract that would fundamentally restrict our flexibility to operate effectively and react nimbly to changes in the aerospace market," Healy said. Many of the outsourcing provisions in the contract have been in place since 2002 or earlier, Healy said. He said the company's financial success to which the Machinists point came after the outsourcing language. Both of Boeing's major unions in the Puget Sound region, however, say outsourcing has cost the company already on its 787 Dreamliner program. Boeing relies on global partners to supply major sections of the 787. Supplier and production problems have led the company to delay deliveries of the Dreamliner by an average of 20 months. The company intends to have the first 787 into flight testing later this year, but a strike could disrupt its latest schedule. "It's time for Boeing to stop the lip service and take real action," said Ray Goforth, president of the Society of Professional Engineering Employees in Aerospace, in a statement Saturday. "Face the fact that the global network is a failure and bring the critical work back so the experienced employees can get the 787 back on track." Boeing bought 787 partner Vought's half of a joint venture in a South Carolina factory -- a cost the Machinists say Boeing could have saved by leaving the 787 work with its own workers. Analyst Hamilton thinks it likely Boeing will have to give a little on outsourcing to sign a contract with the Machinists. He believes Boeing can still be competitive if it relents and brings back some of its outsourced work. Boeing would still need the ability to lay people off in an economic downturn, he said. Health care The Machinists view Boeing's health care offer as a takeaway, said Connie Kelliher, union spokeswoman. Based on the plan now, more than half of the union members would participate in the new contract's no-contribution plan. Boeing added improvements to that plan: increasing the lifetime benefit to $1.5 million, providing coverage for same-sex partners and improving coverage for organ transplants. But the majority of Machinists who use the plan focus mainly on the increases: a bump in out-of-pocket maximums to $6,000 from $4,000, a $75 increase in the annual deductible for a family and a mandatory generic prescription clause. "In a time of record profits, they really should not have come to the table with any takeaways," Kelliher said.

1. Early morning gunfire wounds 2 in Everett 2. Father guilty of manslaughter in girl's death 3. ZZ Top fans get Everett buzzing 4. Crash devastating for toddler 5. Snohomish County budget passes, with a caveat 6. Fall 2009 Wesco All-League Teams 7. Laundry fire sparks concerns over smoke detectors 8. Two people injured in Highway 9 collision 9. Northrop: Boeing's 767 ‘no longer commercially viable' 10. Lynnwood police seek hit-and-run driver 2 - Top 10 Stories Most Talked about 3 - Top 10 Stories Most Emailed

• Holiday Lightings & Santa Sightings • Ruling in the pool • Archbishop Murphy takes title • A season of performing arts • Budget numbers have official fuming • Wildcats move on to 2A semifinals • Holiday Bazaars & Fairs Calendar • Edmonds’ Westgate Chapel serves up hospitality for holiday • Mavericks fall • Boeing will build, flight test and deliver 787s in South Carolina to spe ... • Snohomish County EDC promoting job growth in key industry clusters • $4 million grant to advance brain tumor research has Everett links • Providence medical center construction tops off its 12-story steel frame ... • Tulalip affordable housing project to be financed by KeyBank, Raymond Ja ... • Arlington's Lak of Ink has a growing following for Luke Kooyman's creati ... • Bank of the Northwest formed • Cascade Bank earns $1.6 million