Boeing contract: How might engineers union reply?

EVERETT — The state of the economy and a lengthy Machinists strike could factor into negotiations between the Boeing Co. and its engineers union.

About 20,500 Boeing engineers and technical workers could have a final contract offer from Boeing in their hands later this week. They’ll have until Dec. 1 to decide whether to accept the proposal or go out on strike. The members of the Society of Professional Engineering Employees in Aerospace will make that choice in an even weaker economy than when the Machinists chose to strike.

A strike by SPEEA “is the last thing anybody needs right now,” said Scott Hamilton, a local analyst with Leeham Co.

As Scott Carson, president of Boeing Commercial Airplanes, told business and community leaders last week, “strikes are hard on everyone,” including employees, Boeing customers, the company and the community.

Analysts estimate Boeing lost as much as $100 million daily in deferred revenues from the Machinists’ strike. The strike also further pushed back Boeing’s already delayed 787 Dreamliner. In Snohomish County, the strike meant roughly 10,500 Machinists went without paychecks for eight weeks and local businesses saw less spending.

From the time when Boeing began serious talks with its Machinists in August to when it did so with its engineers union in late October, the economy has slowed dramatically, as has business for Boeing.

The Dow Jones Industrial Average, which was still above 11,000 in August, has dropped below 9,000. Shares of Boeing’s stock, which had traded slightly above $65, have dropped to the $46 range as of Friday. And from August through October, Boeing picked up only 93 of its 637 orders year to date.

Regardless, SPEEA’s executive director Ray Goforth said he found Boeing’s first contract offer, presented Thursday, “disappointing.”

“It is clear difficult talks remain,” Goforth told members.

Analyst Hamilton also wasn’t optimistic about initial exchanges between Boeing and SPEEA.

“The early signs are not encouraging,” he said.

In its first offer to SPEEA, Boeing continued to push for some of the “takeaways” that enraged Machinists and led members of that union to strike. The company’s first full offer still included health-care increases and sought to eliminate the traditional pension plan for new workers, Hamilton noted. Boeing has said it wants to provide a more portable pension, similar to a 401(k)-type plan, for new workers who may not spend their entire careers working for the company. But Machinists and engineers have pointed to the recent economic turmoil, when 401(k) plans were hit hard by the market’s decline.

“We also have to remember that SPEEA doesn’t have a penchant for going on strike,” Hamilton said.

Boeing may be counting on that, the analyst said.

SPEEA has struck Boeing only twice in the last six decades. Only one of those strikes, a 40-day walkout in 2000, was significant. The other strike, in 1993, lasted only one day.

Over the same time, Boeing’s Machinists have staged seven strikes, including the 57-day strike that wrapped up just a week ago.

There were a few early positive signs in negotiations between SPEEA and Boeing.

Before serious negotiations at the SeaTac hotel began, Boeing made an effort to assure its engineering and technical workers that the company recognized it may have put too much engineering work in suppliers’ hands. The company’s vice president of engineering, Mike Denton, said that Boeing would pull back even some work on the next version of the Dreamliner, the 787-9.

Unlike with its Machinists’ union, Boeing agreed to keep private specifics of its offers to SPEEA. The company did not release to the media the details of its proposed wage and pension increases in the first offer. The Machinists chastised the company for bargaining through the press rather than negotiating with union leaders.

Boeing may have learned its previous bargaining strategy “backfired” with the Machinists and has adapted for contract talks with SPEEA, Hamilton said.

Carson indicated last week that something needed to change in the company’s relationships with its unions.

“There shouldn’t be an ‘us versus them’ mind set in labor relations at Boeing,” Carson said.

“We have got to find a better way.”