SPEEA proposes Boeing contract extension in light of 787 woes

With 787 woes piling up, the Boeing Co. faces a potential strike by the engineers and technical workers tasked with coming up with solutions on the Dreamliner.

However, Boeing could make its union troubles disappear if it accepts a proposal to extend for four years its most recent contract with the Society of Professional Engineering Employees in Aerospace, which represents 22,950 Boeing workers. The company is expected to answer SPEEA’s offer at a meeting Thursday morning.

“I hope Boeing accepts the SPEEA proposal and moves on,” Scott Hamilton, an analyst with Leeham Co., wrote in an email Wednesday.

The union pitched the idea of rolling over its contract in a meeting with Boeing on Wednesday, just hours before the Federal Aviation Administration grounded the fleet of 787s until Boeing resolves issues with the jet’s battery. The agency already had launched a rare comprehensive review of the Dreamliner.

Accepting the SPEEA’s offer would free Boeing and its workers from “protracted and increasingly contentious negotiations that appear headed for a strike,” the union said in a statement.

Boeing previously rejected the notion of extending SPEEA’s contract. In an interview with The Herald last week, Mike Delaney, vice president of engineering for Boeing Commercial Airplanes, suggested the company and SPEEA are “really not that far apart.” Later in the week, Boeing increased its wage offer to SPEEA.

But Boeing has been adamant about its plan to do away with a defined pension plan for incoming SPEEA members, offering to switch new employees to a 401(k) retirement plan that is opposed by SPEEA. It’s unclear whether Boeing will change its mind on pensions now that the company faces more problems with the 787. The company said it was reviewing SPEEA’s offer Wednesday night but gave no further comment.

Bill Dugovich, SPEEA’s communications director, didn’t comment on whether the union is using Boeing’s 787 troubles to its advantage. SPEEA worked on its proposal over the weekend, after Boeing found out it was facing an FAA review but before the agency grounded the Dreamliner.

“Our engineers and technical workers are critical to the process that’s going to correct the 787,” Dugovich said.

SPEEA members both understand the importance of restoring confidence in Boeing’s 787 and are willing to play a role in doing so, he said. But the union wants a contract that “respects our members’ contributions” to Boeing’s successes, Dugovich said.

Should Boeing reject its proposal, the union would go back to putting pieces in place “to stage a work stoppage, a strike, if necessary,” Dugovich said.

A strike could bring Boeing’s efforts to return 787s to the air to a halt and compromise the FAA’s ongoing review of the new jet.

“Any work action by SPEEA will slow resolution of the 787 issues,” analyst Hamilton wrote in an email Wednesday.

Last week, Boeing’s Delaney said the company has contingency plans for work stoppages, including bringing in engineers from other divisions within the company if necessary. Boeing CEO Jim McNerney echoed that sentiment Wednesday, saying Boeing would “make available the entire resources” of the company in response to the FAA’s decision to ground the company’s 787s.

However, that might not be how the FAA views a SPEEA strike. A work stoppage or other disruption would heighten FAA scrutiny of Boeing’s compliance with the agency’s rules, an unnamed FAA spokesperson told Reuters on Wednesday. The FAA declined to comment further on the issue.

“Right now the 787 crisis should trump all other considerations,” analyst Hamilton said. “Boeing needs all hands on deck.”

A look at SPEEA’s latest offer

On Wednesday, the union proposed extending the contract it signed in 2008 for another four years. Here’s a look at key elements of that contract as well as recent offers from Boeing:

Annual wage increases

2008 contract provided 5 percent wage pool increases over four years for engineers and technical workers.

Boeing’s last offer for engineers included 5 percent increases in years one and two, 4 percent in the last two years.

The company’s latest offer for technical workers included 4 percent increases each year, with a lump sum payment of 1 percent in the first two years.

Health care

The average SPEEA member currently pays $2,000 for health insurance.

SPEEA’s proposal would freeze the health care plan; Boeing’s would increase employee contributions, but less so than its first contract offer in September.

Retirement

In 2008, Boeing bumped pension to $83 per month for each year of service in 2012, up from $70 in 2008.

Boeing seeks to eliminate the defined pension plan for new SPEEA members, switching them to a 401(k) plan.

SPEEA’s proposal keeps the defined pension for new hires and increases pension at a rate of $2 annually to $91 monthly by 2016.

The union also demanded that Boeing recognizes same-sex survivor pension benefits pursuant to Washington state law.

Sources: Herald archives, Boeing, SPEEA

More information

• Boeing’s negotiations website: boeing.com/speea-negotiations

• SPEEA’s negotiations website: www.speea.org

More in Herald Business Journal

Sign of the future: Snohomish business aims to reshape industry

Manifest Signs owner thinks that smart signs is an unexplored and untapped part of his industry.

Snohomish County’s campaign to land the 797 takes off

Executive Dave Somers announced the formation of a task force to urge Boeing to build the plane here.

A decade after the recession, pain and fear linger

No matter how good things are now, it’s impossible to forget how the collapse affected people.

Panel: Motorcycle industry in deep trouble and needs help

They have failed to increase sales by making new riders out of women, minorities and millennials.

Costco rises as results display big-box retailer’s resiliency

Their model has worked in the face of heightened competition from online, brick-and-mortar peers.

For modern women, 98-year-old rejection letters still sting

In a stark new video, female Boeing engineers break the silence about past inopportunity.

Tax reform needs the public’s input on spending priorities

The GOP tax plan is a good idea, but the next step should give us a voice on how taxes are spent.

Commentary: GM, Boeing fight a war of words over Mars

Boeing is strongly signaling how crucial deep-space exploration is to its future.

Under cloud of ethics probes, Airbus CEO Enders to step down

He leaves in 2019 after 14 years. Meanwhile, aircraft division CEO Fabrice Bregier leaves in February.