Boeing to make full offer to engineers Thursday

By Michelle Dunlop Herald Writer

EVERETT — Some 11,430 engineers and technical workers at the Boeing Co.’s Everett site were to find out Thursday whether the company’s initial contract offer meets their needs.

Boeing’s offer, to be conveyed at a negotiating session in the morning, is unlikely to be the company’s final one, but the reception it gets could indicate whether a strike is brewing for members of the Society of Professional Engineering Employees in Aerospace, a union that was formed by 60 Boeing engineers in 1944.

As the past has shown, a work stoppage would no doubt hamper Boeing.

SPEEA-represented engineers and technical workers design airplanes, approve changes during assembly, analyze flight-test data and ultimately verify that each jet produced is up to standard. With demand high and technology changing rapidly, this is a crucial time for the design of new airplanes and production of present ones.

For its part, Boeing has said it will tap engineering expertise elsewhere in the future if costs remain high here. Boeing’s growing presence in union-unfriendly South Carolina is a present-day example of how that could play out.

“We’re eager to get the full offer,” said Tom McCarty, SPEEA president, at a rally outside Boeing’s engineering offices near Paine Field on Wednesday.

Growing interest in the contract talks has been evidenced by turnout at events like Wednesday’s, which drew 2,000 workers, double the number union leaders had expected.

Roughly half of SPEEA’s Puget Sound area members work at Boeing’s Everett facility, including 6,904 engineers and 3,750 technical workers. Another 776 workers are represented by the union but are not members.

What McCarty has seen of Boeing’s offer so far has been “very disappointing,” he said. SPEEA leaders have hinted that union members might be advised to vote down the company’s first offer to demonstrate member faith in negotiators and to gain Boeing’s respect for the “nerds” who design and test the birds.

Engineering value

SPEEA says such respect has been lacking since Jim Albaugh, former president of Boeing Commercial Airplanes and once an engineer himself, announced in June his plan to retire.

Ray Conner, who succeeded Albaugh, countered that claim in a message to employees on Wednesday, saying he has “tremendous admiration” for the the work performed by the 22,765 SPEEA-represented employees across metropolitan Puget Sound.

“I think our engineering team brings critical value and talent to all our products and services,” Conner wrote. “We can’t build airplanes without our engineers and techs, just like we can’t build airplanes without the rest of our team.”

On that, the two sides can agree. McCarty said “both engineers and technical workers are at each stop along the way,” from design to delivery.

So it’s no surprise that during SPEEA’s only major strike, in 2000, aircraft development work stopped and aircraft deliveries slowed dramatically. The company delivered just 15 airplanes in 40 days, though it had planned to deliver at least 40.

A work stoppage in 2012, however unlikely, would come as Boeing is working to increase aircraft production and developing the 737 MAX, a 767-based aerial-refueling tanker and the 787-9.

Rhetoric flies

Boeing and union leaders have been discussing SPEEA’s contract since last summer. Weekly meetings commenced earlier this summer. SPEEA submitted requests in June on the contract that expires Oct. 6.

But talks between the two sides have grown heated.

Last week, Mike Delaney, vice president of engineering for Boeing Commercial Airplanes, told Bloomberg News that the company could send development work on future aircraft programs to the company’s engineering workers at lower-cost sites like those in Missouri, Alabama and Texas.

Delaney’s words puzzled some of the engineers and technical workers on Wednesday. “We’ve definitely seen a lot of outsourcing of engineering with the 787. It didn’t work,” said David VanTine, a technical worker in Everett.

Boeing relied on global partners to design major portions of the company’s mostly composite 787. Some suppliers weren’t up to the task, contributing to a nearly four-year delay in delivery of the Dreamliner to customers.

Simply shifting work normally done by SPEEA workers to engineers elsewhere brings hazards and costs, analyst Scott Hamilton of Issaquah-based Leeham Co. warned earlier this week. However, regardless of the outcome of the contract talks, Hamilton believes that eventually “Boeing will relocate engineering work from Seattle. The sheer volume of growth over the next several decades will demand it.”

The company already has set up 787 operations in North Charleston, S.C., where neither SPEEA nor members of the International Association of Machinists and Aerospace Workers represent workers. The IAM in Washington and Boeing inked a new contract last year that hinged on the union dropping a labor complaint over the North Charleston site in exchange for a guarantee of future 737 MAX work in Renton.

Delaney said places such as Alabama, which, like South Carolina, is a “right-to-work” state where workers can’t be compelled to join a union, enable a lower average rate of pay for engineers than does Seattle. The average SPEEA engineer working for Boeing in the Puget Sound region makes about $110,000 and has nearly 16 years of experience. The average technical worker also has about 16 years of experience and makes $79,300, according to the union.

Boeing leaders including Delaney have said they need to be mindful of cost to keep work in the Washington. Delaney said the company has to take steps, including reducing pension burden, to remain competitive. Almost on cue, on Wednesday EADS, the European parent company of Boeing’s main rival, Airbus, said it’s in merger talks with BAE Systems to create the world’s largest aerospace company.

Regardless of competition, SPEEA leaders and members point to double-digit percentage raises for Boeing executives, soaring profits and increased dividends for shareholders as reasons the company needs to reward them fairly. For many on Wednesday, that meant preserving the pension plan, even for new employees.

SPEEA member VanTine was working for Boeing in Spokane when the Chicago-based company sold that facility to Triumph. VanTine later left Triumph and came to Boeing in Everett because Triumph didn’t have a pension plan like Boeing’s.

Twenty-two-year Boeing engineer Terry Quick also isn’t interested in a contract that doesn’t keep the pension plan.

“We’re not going to sell out the people who come behind us,” he said.

Quick would be happy to see a contract similar to the one the union has currently. But Boeing already has turned down an offer by SPEEA leaders to extend the existing contract.

After delivering the contract offer today, Boeing negotiators are willing to meet with SPEEA leaders on a daily basis to continue talks if necessary, said Doug Alder, a company spokesman.

What’s next

If they choose, SPEEA leaders could send Boeing’s offer to the members for a vote without further negotiations. If union leaders suggest members vote down the offer, it would be a test of member faith in leadership but could also send a strong message to the company.

In recent years, SPEEA-represented workers elsewhere have voted down initial contract offers. Boeing engineers in Wichita, Kan., voted down a contract in 2009, as did SPEEA-represented workers at Spirit AeroSystems there in 2009 and again in 2011. Compared to those bargaining units, SPEEA has a much higher membership rate, with roughly 92 percent of Boeing engineers and technical workers belonging to the union.

In an interview last month, SPEEA executive director Ray Goforth suggested that rejecting Boeing’s initial offer could also be in the cards here in the Puget Sound region.

“I think we’re going to have to just vote (Boeing’s offer) down,” Goforth said.

SPEEA president McCarty also floated the idea of rejecting Boeing’s offer in his most recent newsletter column, titled “If it doesn’t make sense — just vote no.” McCarty emphasized that the union wouldn’t go out on strike just because members reject Boeing’s offer. When the union struck in 2000, it did so after voting down two offers and after members voted in favor of a strike, McCarty noted.

“My impression is that we are being tested, since after all, this is negotiations,” McCarty wrote. “We need to stick to our principles.”

Michelle Dunlop: 425-339-3454; mdunlop@heraldnet.com.

Editor’s note: An earlier version of this story reported that Mike Delaney, vice president of engineering for Boeing Commercial Airplanes, had told Bloomberg News that the company could move engineering work elsewhere in the event of a work stoppage. A Boeing spokesman says: “Delaney’s comments to Bloomberg News centered on Boeing’s ability to use the full resources of the company when launching new products in order to stay competitive. He never said that Boeing would use engineering outside the Puget Sound region if SPEEA members reject our contract proposals. It is not Boeing’s stance.” The Bloomberg story, too, has been revised accordingly.