EVERETT — Boeing and its engineering union have reached tentative contract deals after weeks of secret talks that culminated in a week of marathon negotiating sessions in windowless conference rooms at a Bellevue hotel.
The proposed terms ensure above-market wages and soften the landing for union members if Boeing moves their work out of state. It also freezes pension benefits in 2019 and slightly increases members’ share of healthcare costs. Other retirement benefits are improved to offset the pension changes.
The tentative contracts cover the two biggest bargaining units of Society of Professional Engineering Employees in Aerospace (SPEEA) — about 14,000 professional engineers and 6,500 technical workers.
If SPEEA members approve the proposals next month, Boeing will have long-term agreements with its two largest unions. Reducing the chance of labor strife in the next few years is critical for the aerospace giant, which is developing new versions of several commercial airplanes.
The last few contract negotiations between Boeing and its two biggest unions — SPEEA and the International Associated of Machinists and Aerospace Workers’ (IAM) District Lodge 751 — have been contentious. Two years ago, IAM members narrowly approved a controversial agreement that ends in 2024. In 2008, Machinists in Washington went on strike after talks with the company stalled.
The last negotiations between Boeing and SPEEA started in 2012 and dragged on into 2013 before the sides reached agreement.
SPEEA members will vote by mail on the current proposals from Jan. 27 through Feb. 10, when votes will be tallied. If approved, the terms will take effect the following day and run through Oct. 6, 2022.
The goal was to avoid “another really contentious negotiation that was going to bruise both sides,” SPEEA Executive Director Ray Goforth said.
“The terms of this agreement are vastly better than what most people thought were possible in 2016,” he said.
Boeing and SPEEA agreed to set aside unrelated issues that often make their way into — and slow down — contract talks. There was no discussion about lobbying lawmakers in Olympia to pass legislation tying aerospace tax benefits to job numbers. Since agreeing in 2014 to build the 777X in Washington, Boeing has moved or announced plans to move several thousand engineering jobs out of state.
The talks grew out of regular meetings between Boeing executives and union leaders. They kept talks small and intimate. First they met in groups of four or five people for preliminary discussions.
The main negotiations came last week in unmarked conference rooms at the Hilton in Bellevue. At most, 15 people were in the room, compared to as many as 70 during the previous contract negotiations, Goforth said.
No one dressed in clothes with SPEEA or Boeing logos.
The mood was focused on problem solving and compromise, said Todd Zarfos, a vice president and one of the top engineers at Boeing Commercial Airplanes. He has represented the company in negotiations with SPEEA since 2002.
If work does have to be moved, Boeing will “do everything possible to find other work” for any affected SPEEA members, he said.
In the proposals, Boeing promises to spend four months trying to reassign affected workers; if unsuccessful, Boeing agreed to significantly increase the involuntary layoff benefit.
The union explained the changes in a news release: “In the unlikely event these placement efforts fail, individuals laid off due to the movement of work will receive a minimum of 26 to a maximum of 60 weeks of pay (2 weeks per year of service) and six months of medical and dental coverage. This protection, along with the doubling of the existing voluntary layoff benefits, would take effect immediately after ratification.”
The tentative agreements are good news to investors and industry analysts.
“It gives Boeing some stability and takes away” any shadow of labor strife, said an investment analyst at a major commercial bank. He spoke on the condition of anonymity because he had not been authorized to talk publicly.
“Removing that risk is absolutely key” for Boeing, said Richard Aboulafia, an aerospace analyst and vice president at the Teal Group, a consulting firm based in Fairfax, Virginia.
Boeing has “an extremely ambitious product development roadmap,” that includes introducing new versions of the 787 and 737, and developing two largely new airplanes — the 777X and the KC-46 aerial refueling tanker, he said.
The company’s softer approach to contract talks could be due to the change in leadership last year, when Dennis Muilenburg replaced Jim McNerney as Boeing’s CEO and president. During his tenure, McNerney took a hard line with organized labor that earned him the ire of many union members at Boeing.