The deal guarantees average 5 percent compensation increases for 5 years, slows growth in members’ traditional pensions from 2019 on and adds new provisions for SPEEA members whose jobs are moved elsewhere.
In a surprise breakthrough, peace has broken out between Boeing and its white-collar engineering union.
Management and the leadership of the Society of Professional Engineering Employees in Aerospace (SPEEA) said Wednesday they have tentatively agreed on a new, six-year contract extension well before the current pact’s October expiration.
The early deal, provided the union’s members ratify it, would prevent a repeat of the bitter, public drama of threats and counterthreats that characterized the last SPEEA contract talks.
Key terms of proposed contract extension
• Guarantees an average 5 percent annual increase in compensation for 5 years
• Significantly slows growth in members’ traditional pensions from 2019 on
• Adds new provisions for SPEEA members whose jobs are moved .
Source: Boeing, SPEEA
Those negotiations ended in early 2013 with the union split and weakened, and Boeing executives fuming at SPEEA’s leadership. A series of engineering work transfers to other parts of the country began soon afterward.
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This time, before formal contract negotiations scheduled to open this summer, the deal was worked out in secret discussions between Boeing management and SPEEA’s executive board.
The union’s nearly 21,000 members will vote by early February on the contract, which guarantees an average 5 percent annual increase in compensation for five years, significantly slows down growth in members’ traditional pensions from 2019 on, and adds new provisions for members whose jobs are moved .
“These negotiations were possible because SPEEA and Boeing decided not to let our areas of disagreement prevent us from making progress on items where we do agree,” SPEEA Executive Director Ray Goforth said in a statement. “These contract extensions are the result of a lot of hard work and goodwill. Hopefully, this gives us a template for the future.”
Ray Conner, Boeing vice chairman and commercial-airplanes chief, welcomed the deal.
“This tentative agreement recognizes the significant contributions of our engineering and technical workforce and reinforces Boeing’s commitment to the Puget Sound region,” Conner said in a statement.
“As our competitive environment gets tougher, ratification will enable Boeing to be more competitive in today’s and tomorrow’s commercial and defense markets, while helping ensure stability for Boeing’s future,” he added.
The terms of the deal provide average 5 percent annual compensation increases from 2017 through 2021, then a 4.5 percent increase in the final year, 2022.
That’s essentially maintaining the increases in the current contract for six more years.
In a union concession, the deal will impose a “soft freeze” on the traditional pension from 2019 on, said union benefits director Matt Kempf.
SPEEA members hired after March 2013 had already lost that pension in a previous contract, as did Machinists union members when they reluctantly agreed to an eight-year contract extension in early 2014.
But the Machinists contract instigated “a hard freeze”: The pension benefit due upon retirement stopped growing from that point on.
In this deal, by contrast, the SPEEA pension — a function of both credited years of service and final average earnings — will stop accruing additional years of credited service but will still be bumped up by final earnings upon retirement.
“The benefit will continue to grow until retirement, though more slowly,” said Kempf.
In compensation, Boeing will bump up the company’s current 401(k) contribution by 9 percent of gross salary in the first year of the freeze, 8 percent in the second year, 7 percent in the third, and thereafter by 3, 4 or 5 percent annually depending on the employee’s age.
That’s on top of the company’s existing 401(k) match of up to 6 percent of gross salary.
SPEEA spokesman Bill Dugovich said the deal retains continued retirement-benefit growth while offering market-leading wages.
The proposed contract also maintains the current health plans with only “modest” increases in employee premiums and copays, said Todd Zarfos, the Boeing vice president who heads the company’s Washington state engineering center and was a key participant in the contract discussions.
It also contains provisions to help members affected by Boeing moving engineering work. The company since 2013 has announced the transfer of some 4,300 engineering jobs out of state, mainly to California, Alabama, Missouri and South Carolina.
“Management is committing to use exhaustive efforts to place individuals impacted by such a move,” SPEEA said in a statement. “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.”
Zarfos said these provisions should not be seen as anticipating that more engineering work will move out of state.
“Not at all,” Zarfos said in an interview. “We know that job security has been an ongoing issue expressed by our employees and certainly by the union.
“We’re trying to demonstrate that we are going to go above and beyond,” he added.
Dugovich said the agreement arose out of routine discussions with the company, and the talks were kept secret because the union leadership didn’t know if they would progress.
The union’s executive board began formal talks with Boeing after the holiday break.
“It’s a unique opportunity that it came about, and the board felt it necessary to take advantage of the opportunity without raising hopes,” Dugovich said.
Zarfos said Boeing and SPEEA jointly decided to take a novel approach.
“Coming out of the last contract, clearly it was a contentious environment and certainly not the environment we want to have with any of our unions,” he said. “We made a concerted effort over the past several years to rebuild those relationships.
“Several of us, including me, have monthly meetings with the union,” Zarfos said. “It started with that. … We saw over time where we worked through some issues and we just tried to build on that success. Ultimately it culminated, kind of organically, in a mutual interest that we do things differently.”
SPEEA members will vote on the agreement by mail, with counting set for Feb. 10.
Most members are at Boeing facilities in the Puget Sound region, though smaller numbers work in Oregon, Utah, California and Florida.