Boeing and its unions already at a negotiating stance

See part two of the Q&A with Jim Albaugh, Tom Wroblewski and Tom McCarty here.

* * *

It’s like a poker game.

Some bet big to win big.

Others take a loss here or there to throw their opponents off.

And no one likes to show his or her hand.

That’s how labor relations are played between the Boeing Co. and its unions here in the Puget Sound region.

The next contract between Boeing and both its engineers and Machinists isn’t up for negotiations until 2012. But each is keeping close tabs on the other’s moves, even two years in advance.

Two years after a 57-day strike by the Machinists union, and a year after picking South Carolina as the site of a second 787 assembly line, the Boeing Co. is relatively optimistic about the 2012 labor talks.

“The unions and the Boeing Co. have been very successful working together,” said Jim Albaugh, president of Boeing Commercial Airplanes.

Albaugh, who last year moved from Boeing’s defense division, didn’t take part in the 2008 negotiations but was in the Puget Sound region for the fallout of the failed discussions with the Machinists that precipitated Boeing’s South Carolina choice.

“Boeing employees here, they love what they do,” he said. “The employees wouldn’t work as hard as they have in the last two years if they weren’t satisfied with the company.”

Albaugh has been holding meetings with employees to keep them informed about the direction of the company, something he hopes will be helpful when negotiation time rolls around.

“My sense is we have a lot of common ground with both (unions),” he said.

Benefits

While Albaugh sees common ground, leaders of Boeing’s unions see trouble brewing.

Based on Boeing’s recent negotiations in other parts of the country, ”we think Boeing is going to start a campaign to cut back on benefits,” said Tom McCarty, president of the Society of Professional Engineering Employees in Aerospace, which represents 20,517 engineers and technical workers in the area.

For instance, Boeing said recently that its non-union workers in the Puget Sound region will bear a larger portion of their health care costs beginning next year. The details of that change have yet to be announced.

McCarty said he realizes that health care costs are rising. The union wants to help solve how Boeing handles the escalation in health care costs, not to have costs passed on to them unilaterally, he said.

Tom Wroblewski, president of the Machinists union, points out that a healthy work force is in Boeing’s best interest. Altogether, he said, labor and benefits are only about 5 percent of the cost of an airplane.

“Why not partner with us on the other 95 percent?” rather than cut the benefits the unions have now, he said.

For several years, Boeing has been wanting to move away from offering a defined pension plan and instead have a 401(k)-type plan, like the one its non-union members receive. McCarty can understand some of Boeing’s arguments for switching to a 401(k)-like retirement fund — it benefits workers who don’t spend their entire careers at the company.

SPEEA is willing to discuss switching to a different type of retirement from the defined pension.

But “Boeing has not offered a plan that is attractive enough,” McCarty said.

As for Boeing’s specific plans for health care and pensions, Albaugh was tight-lipped, taking a cue, perhaps, from the 2008 negotiations, when the unions accused Boeing of negotiating through the media.

“The last thing I want to do is start a negotiation in the press two years before the union contracts expire,” Albaugh said.

Outsourcing

While outsourcing always has been a tough subject between Boeing and its unions, the topic become more contentious because of the delays to the 787 program caused by troubles with Boeing’s global supplier network.

“We’ve put more outside than we’d ever done before,” Albaugh said of the 787.

As the company goes forward, Boeing plans to bring more work back and already is doing more 787-9 design work than it did for the 787-8, which is more than two years late.

“There are some capabilities that we’ll do inside,” he said. “We’ll do some of everything.”

The way that Boeing’s unions here responded to the 787’s problems — helping the company get as far as it is today — should demonstrate the importance of keeping work here, the unions say.

“Look at the 787 line, the younger workers, they’re pulling tricks out of their hats,” Wroblewski said.

Long-term contract

After the 2008 strike, Boeing’s leaders pushed for a long-term, no-strike agreement with the Machinists. The two sides met to discuss such a contract in 2009 as Boeing considered where to locate its second 787 line.

“Boeing could have been on the leading edge” and could have signed a long-term agreement last year with the Machinists, Wroblewski said.

“If they were to come to the table with no takeaways (of benefits), they’d have labor peace,” he said.

But the Machinists and Boeing failed to reach an agreement. Boeing picked South Carolina, saying it needed to make sure 787 production continued in the case of a strike in the Puget Sound region. The company has to be a reliable supplier to airlines and leasing companies if it’s to be successful, Albaugh said.

“If we’re not successful as a company, then there are no jobs for anybody,” he said.

McCarty, whose SPEEA members rarely strike, believes that the blame for strikes runs both ways.

“Strikes are always pegged on the workers,” McCarty said. “Perhaps, instead, people should look at the company and ask what it did to provoke a strike.”

Thinking back on the Machinists’ strikes over the years, Wroblewski said he’s not sure whether strikes create job stability. But strikes do create one thing: bad feelings.

For the engineers, a long-term contract like the one that Boeing is expected to seek with the Machinists doesn’t make sense, McCarty said. An eight- or 10-year contract would require too much guesswork for the engineers to feel comfortable, he said.

“Engineers don’t speculate a lot,” he said. “We don’t say, ‘Gee, we think those bolts are strong enough to hold the wings on.’ We calculate, we know.”

The future

“We’re really at a pivotal point in the history of Boeing,” Albaugh said.

The company is looking to ramp up its 737 and 777 lines; it’s trying to get its 787 and 747-8 ready to deliver and planning to increase 787. Boeing is dealing with increased competition not just from Airbus but from China, Russia and others, he said. As Boeing deals with production changes and competition, its leaders need to decide the future of its 737 and 777 aircraft.

During the Farnborough Air Show last summer near London, Boeing CEO Jim McNerney told the media that employees in the Puget Sound area would need to earn the work on the company’s future jet lines. That didn’t sit well with the unions.

“What do we have to earn? There’s nowhere else that can build 31 737s a month,” Wroblewski said. After the troubles with the 787, “I think we’ve earned the right to build (Boeing’s next new plane),” he said.

Albaugh said he’d like to see future programs stay in the Puget Sound region.

“My preference is to do the work here,” Albaugh said. “But we have to be competitive and have to be able to be reliable.”

By the numbers:

1: Length in days of the shortest strike against Boeing in the Puget Sound region, by SPEEA in 1993.

$3.05: Average difference in wages between union and non-union workers in Washington state.

4.5: Percentage of workers in South Carolina, where Boeing’s second 787 line is, who belong to a union.

20.2: Percentage of Washington workers who belong to a union.

35: The number of workers who formed the first local Machinists union.

140: Length in days of the longest Machinists strike at Boeing, in 1948.

20,517: Boeing engineers and technical workers represented by SPEEA in the Puget Sound region.

27,000: Boeing Machinists in the Puget Sound region.

70,000: The number of Boeing employees laid off after the end of World War II.