All signs point to a heavy rejection of Boeing's first contract offer to its white-collar engineering union when the mail-in ballots are counted Monday.
All signs point to a heavy rejection of Boeing’s first contract offer to its white-collar engineering union when mail-in ballots are counted Monday.
That will leave the two sides squared off in an increasingly hostile confrontation over the future of 23,000 local members of the Society of Professional Engineering Employees in Aerospace (SPEEA).
Boeing management warned Wednesday it might move future work out of the region if it can’t keep down the cost of engineers.
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Meanwhile, the union is contemplating a strike.
At a lunchtime meeting Wednesday outside Boeing’s Commercial Aviation Services building on East Marginal Way in Seattle, a small crowd of SPEEA members asked questions of union representatives and aired their feelings.
Most wore red union T-shirts and sported badges that said, “I’m voting NO.”
“I have not heard of anybody voting yes,” said Jeanne Fellin, an airline-support engineer who has worked for Boeing on and off for 25 years.
“A lot of people are upset,” said Shannon Qualls, a 23-year technical designer. “The contract is insulting. The compensation package is totally unacceptable. It’s less than the rate of inflation. It’s sad to see, when Boeing is doing so well with orders and the money they are making.”
Yet Boeing’s engineering leader Mike Delaney on Wednesday warned that if the company is forced to give local employees higher compensation and benefits than they would earn in other markets, the inevitable outcome will be Boeing will move engineering work — especially high-end tasks developing new airplanes, as well as defense projects — out of the Puget Sound region.
“It won’t be fast,” said Delaney, addressing The Seattle Times editorial board. “We’ll keep hiring people to build 737s. But slowly over time, if you become uncompetitive, you have to deal with the arbitrage and leverage other resources.”
He pointed out that about 30 percent of the engineering work for his unit is already done within the company but outside the Puget Sound region.
“We want you to be rewarded,” said Delaney, as if addressing his engineers. “But you have to understand there is a market out there.”
Issaquah-based industry analyst Scott Hamilton of Leeham.net said Boeing corporate management in Chicago appears to be “completely misreading” the mood of its engineers and technical professionals.
He said the company’s approach to the union leadership this time was dismissive. He recalled its handling of the 2008 contract negotiations with the Machinists union, when, he said, Boeing mistakenly “thought it had the membership in its pocket.” That ended in a ruinous strike.
Hamilton forecasts a “landslide rejection” Monday of management’s first offer.
SPEEA’s leaders won a tactical victory by putting on the ballot an initial offer the company hadn’t intended to be voted on.
After months of bargaining, Boeing released its full contract proposal Sept. 13, just over a week ahead of the deadline for sending out the mail-in ballots.
The offer raises overall compensation of engineers 3 percent annually, and of technical professionals 2 percent annually. (Last year, inflation was 3 percent.)
Boeing proposed also to raise the basic monthly pension benefit from $83 per year of service to $91 per year of service.
And the contract would move new hires onto a 401(k) retirement plan instead of the traditional defined-benefit pension plan.
Delaney and his team expected a week of back-and-forth bargaining that would have made changes to this initial proposal.
But SPEEA Executive Director Ray Goforth didn’t oblige. He dubbed the offer insulting and sent it out to members with a recommendation to reject.
That put Boeing in the embarrassing position of having to disown in advance some of the details in its offer.
For example, current Boeing retirees were incensed when the union pointed out that changes to the contract wording would allow management to cancel medical benefits for some who retired early.
On Wednesday, Boeing issued a statement saying it “has no plans to eliminate retiree medical benefits for current retirees.”
“If we’d had the opportunity to discuss our proposal with the union, we could have clarified that we did not intend to change the status quo,” Boeing said.
Though Boeing has since 1992 gradually and steadily eroded medical benefits for early retirees, given its insistence now that it has no intention to kill those benefits altogether, presumably this specific difficulty can be quickly addressed once the two sides sit down again to negotiate.
But first, Boeing must deal with a likely heavy rejection on Monday.
Raising the pressure
At a union meeting Tuesday, SPEEA’s Goforth laid out for his members a road map of where this conflict could go. He plans a series of progressive steps to ramp up the pressure on Boeing.
If a heavy no vote doesn’t move Boeing in SPEEA’s direction, he said, the next step would be a vote to sanction a strike.
If the union remains dissatisfied after further talks, then it will institute a “work-to-rule” across Boeing’s facilities here, which Goforth said would have the immediate effect of slowing airplane production.
“If that doesn’t work, then at the far end of that process, we are looking at a strike,” Goforth said. “We have a very effective plan in place to shut down production real quick.”
But it would take months to reach that stage and in the meantime, negotiations would continue, probably starting the day after the first vote. Members could continue to work under the existing contract, which expires Oct. 6.
On Wednesday, Boeing’s Delaney said that if the contract fails the first vote, the company will continue good-faith negotiations and work to get a deal.
Analyst Hamilton speculated that a couple of contract votes might still leave the outcome uncertain but that a third rejection would mean a strike.
Delaney said a strike would be “an absolute negative,” and “a complete failure, in my mind, on both sides.” In the end, he said, some deal will be struck, and “we’ll figure out a way to live with that deal.”
Yet his clear message remained: Too expensive a deal won’t be good for this region in the long run.
Dominic Gates: 206-464-2963 or email@example.com