EVERETT — Boeing Co. leaders shot down an offer to extend a labor contract with the union representing its engineers and technical workers, a move that doesn’t bode well for negotiations in the eyes of union leaders.
“We thought we’d be able to help the company out, to keep on its trajectory of converting (aircraft) orders to deliveries, to get the 777X going,” said Ray Goforth, executive director of the Society of Professional Engineering Employees in Aerospace.
The union, called SPEEA, represents 21,000 engineers and technical workers at Boeing in the Puget Sound region. SPEEA’s contract expires Oct. 6.
SPEEA’s Goforth considered the contract extension an offer of goodwill and expediency on the union’s part. Boeing similarly inked a contract extension with the union representing its Machinists late last year — an agreement that was supposed to usher in labor peace at Boeing in the Puget Sound area.
But Boeing’s rejection of SPEEA’s extension offer indicates to Goforth that the company plans to offer his union members “less” than they’ve had these last four years.
“Boeing’s (corporate officers in Chicago) see they have a historic opportunity” because of the recession, Goforth said. “It’s worth a shot to them to take it.”
Boeing leaders say they’re committed to rewarding SPEEA members. But the union’s current contract, which was “the right one at the time” in 2008 is “not sustainable,” a company spokesman wrote in an email Thursday. The contract included annual wage increases of 5 percent and “little in the way of employee contribution toward medical care.”
The company’s proposal will include wage raises but not 5 percent or the 7.5 percent as proposed by SPEEA, Boeing said. Overall, Boeing said its compensation proposal will be “market leading.”
The company’s negotiations with SPEEA in 2008 were overshadowed largely by the strike by the local district of the International Association of Machinists and Aerospace Workers, which represents nearly 30,000 machinists at Boeing. Already behind on the 787, Boeing halted other jet deliveries during the 57-day strike, drawing the ire of key customers such as Virgin CEO Richard Branson.
“It really does make us think, ‘Do we want to take a risk with Boeing in the future?’” Branson said in early 2009.
A labor disruption in 2012, as the company tries both to boost rates on the 787 and to make progress on key development programs, also would not sit well with airline customers.
“They don’t need a distraction, and they don’t need any sign that they’re not a reliable and predictable supplier,” said Gary Chaison, an industrial relations professor at Clark University in Worcester, Mass.
Throughout the negotiations, Boeing also has stressed the need to remain competitive.
“I want my engineering team to be competitive now and ten years from now,” Mike Delaney, vice president of engineering for Boeing Commercial Airplanes, wrote in a message to union members Aug. 23.
Union negotiators, however, say that being competitive shouldn’t mean a decrease in pay or benefits for SPEEA members, particularly at a time when Boeing executives enjoy wage increases and shareholders are seeing an increase in quarterly dividends. The company, which is sitting on a backlog of more than 4,100 unfilled jet orders, wouldn’t be in the position it is if not for the hard work of SPEEA members, union officials are quick to point out.
Over the last four years, Boeing executives, including former commercial airplanes president Jim Albaugh, have emphasized a return to “engineering excellence” after the company shopped out too much engineering work on the 787 to supplier partners. It was an effort that union leaders bought into and reinforced to members.
“People really gave that extra effort,” Goforth said.
The good rapport between Boeing and SPEEA leaders carried into early contract talks. Earlier this summer, Goforth and SPEEA president Tom McCarty praised Boeing leaders for respectful and candid discussions with the union in the initial stages of negotiations.
But the tone of contract talks changed in late June when Albaugh announced his plans to retire, Goforth said. Although Albaugh’s successor Ray Conner was credited with ushering in the early deal with the Machinists, he has been absent from contract talks with SPEEA. In fact, Conner hasn’t contacted the union at all, Goforth said.
Boeing, which will discuss negotiations more thoroughly next week, said Conner is “plugged into the SPEEA negotiations” and “is very engaged in the process.”
Initial proposals by Boeing on retirement have angered some SPEEA members, who feel the company is slighting the workers who have made it successful, Goforth said. Frustration is building among union members as contract talks seem to be heading the wrong direction, he said.
In some locations, workers are pushing for a strike, Goforth said, though he was careful to add that union negotiators aren’t backing it. SPEEA has gone on strike twice: for one day in 1993 and for 40 days in 2000.
While union officials are cultivating the idea that SPEEA members are beginning to feel “disrespected” by the company, as they did in 2000, Boeing leaders say that’s just not the case.
“I couldn’t disagree more,” Delaney wrote. “Today, engineering is more valued by our company from top to bottom than at any time in my career.”
SPEEA’s Goforth isn’t predicting a strike though. He’s not predicting an agreement by Oct. 6 either.
“I think we’re going to have to just vote (Boeing’s offer) down,” Goforth said.
If that were to happen, the union and Boeing likely would extend temporarily the contract and continue negotiating.
Bloomberg News contributed to this report.