As it prepares to roll out a series of new airplanes, Boeing has all but sealed three years of labor peace in the Pacific Northwest by offering...

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As it prepares to roll out a series of new airplanes, Boeing has all but sealed three years of labor peace in the Pacific Northwest by offering a lush contract to its engineering employees.


The union leadership heartily embraced the proposal.


Negotiators from the union representing engineers and technical workers tentatively accepted a three-year contract offer Tuesday, and they strongly recommend members approve it.


“There’s so much money in this contract, it would be hard to reject it,” a union official who asked not to be identified said soon after talks finished Tuesday afternoon.


Over three years, the proposed contract boosts average salaries at least 17 percent for engineers and 15 percent for technical staff. Boeing also agreed to compensation reviews that could add more money in 2007 and 2008 to ensure that pay keeps pace with market salaries.


Society of Professional Engineering Employees in Aerospace (SPEEA) members will vote on the proposal Dec. 1.


The agreement, which covers about 12,000 engineers and 5,700 technical workers in Washington, California and Oregon, comes almost seven weeks after Machinists in the Puget Sound region ended a monthlong strike and accepted an improved contract offer.



Major terms of the Boeing-SPEEA deal


Base compensation:


On average, engineers would get a 7 percent raise in the first year and at least 4.5 percent raises in the second and third years of the contract, which compounds to 17 percent over the three years. On average, technical staff would get a 5.5 percent raise the first year and a minimum 4.5 percent the second and third years, which compounds to 15 percent over three years.


Incentive pay:


Union members would join Boeing’s employee incentive plan, giving a maximum 20 days’ extra pay a year based on company profit. The projected first payout for SPEEA members would be in February, working out to 4.6 percent of annual salary, or an average bonus of $3,775 for engineers and $2,840 for technical staff. The union gave up traditional lump-sum signing bonuses to join the incentive plan.


Medical benefits:


The company health plans would be enhanced, but employees would pay the same share of the cost. Traditional medical-plan inpatient hospital coverage would increase from 95 to 100 percent.


Retirement benefits:


The basic pension plan would increase from $60 to $70 a month for every year of service. The alternative formula based on career-end salary would include incentive pay. The company would increase its 401(k) match from 50 to 75 percent up to 8 percent of salary. For anyone hired after 2006, early-retirement medical benefits would be eliminated. The company agreed to work with the union to find another way to pay for this benefit.


It also came a day after Boeing launched its latest development program, a new stretch derivative of the 747 jumbo jet, sharpening the need for motivated engineers and technical staff.


In a bitter sales battle with rival Airbus and with three new aircraft-development programs in progress — the 787 in design phase, the 777-200LR in flight test and the 747-8 just announced — the company cannot afford any hiccups in relations with the high-tech staff that designs its airplanes.


It looks like the deal will avoid that.


Besides the hefty pay increases, another large element of compensation in the deal moves union members into Boeing’s incentive plan for the first time, providing the chance of an extra 20 days’ pay, depending on company profits. Until now, that plan was reserved for nonunion employees, which SPEEA has long considered an anti-union strategy.


To get that concession, the union gave up the lump-sum bonuses typically awarded to union members on signing a contract. In essence, the engineers are betting on Boeing’s success, with this element of compensation now tied to performance.


With Boeing firing on all cylinders, that seems a safe bet for now. The first payout to SPEEA members on the incentive plan, projected at 4.6 percent of annual salary or an average of $3,775 for engineers, will be in February.


The agreement also enhances medical coverage without increasing employees’ share of the premiums, bucking the health-care trend for most working Americans.


Retirees’ pensions will improve. The basic plan is increased from $60 to $70 a month for every year of service. The alternative pension formula used by many SPEEA members, which is based upon average earnings at career’s end, will include the new incentive payments in that calculation. In addition, Boeing will increase its 401(k) match from 50 percent to 75 percent.


“We listened carefully to SPEEA negotiators and addressed our employees’ top priorities around pay, incentives, health care and retirement,” Boeing Commercial Airplanes Chief Executive Alan Mulally said in a statement.


Charles Bofferding, SPEEA executive director, simply called it “a great contract.”


The only significant loss for the union was a provision that eliminates early-retiree medical benefits for anyone who joins the company after next year.


Bofferding said the talks almost broke down over that issue as negotiations came down to the wire Tuesday.


“It was a very tense day,” Bofferding said.


The company insisted on shedding that financial liability, and the union demanded some alternative to pay for retiree medical expenses for future hires. The union suggested an increase to the 401(k) match for new hires or a health retirement account with employee and company contributions.


The turning point came, Bofferding said, when the two sides agreed to try to find an alternative within a year.


“Is it possible this could evaporate and be replaced with nothing?” Bofferding asked. “That’s a possibility. It came down to the credibility of [Boeing chief negotiator] Jerry Calhoun. We believe we’ve gotten personal commitments and we accepted those commitments.”


With that agreement to put off one rancorous issue until later, the deal was struck.


Bofferding flies to Wichita, Kan., tomorrow to finalize the SPEEA contract there, which is expected to be done by the end of the week.


The SPEEA ratification vote in the Northwest will be conducted by mail. Ballots will be accepted until 5 p.m. Dec.1 and counted that night. If ratified, the contract would be effective Dec. 2.


Dominic Gates: 206-464-2963 or dgates@seattletimes.com