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Boeing, SPEEA Gear Up for Contract Negotiations
By Dominic Gates,
Seattle Times
October 14, 2005
Still recovering from the recent monthlong Machinists strike, Boeing management now faces another contract dance with the next union in line.
Talks begin in earnest Nov. 1 with the Society of Professional Engineering Employees in Aerospace (SPEEA), which represents the bulk of Boeing's salaried engineering and technical talent in the Puget Sound area.
Both sides hope to avoid another damaging production halt.
Speaking Wednesday in Bellevue, Boeing chief financial officer James Bell said any agreement with SPEEA must be "within the economic envelope that's going to allow us to be competitive."
"We did that with the (Machinists)," Bell said. "We expect to do the very same thing with
SPEEA." Yet SPEEA members, like the hourly workers, have endured years of layoffs, outsourcing and cost-cutting. This is the first contract negotiation since the global aviation business began to rebound, creating a shortage of ace technical talent.
So the white-collar staffers want what the Machinists got and then some.
Since Boeing aspires to be the world's leading aerospace company, SPEEA executive director Charles Bofferding is after nothing less than market-leading compensation.
SPEEA hasn't yet settled key details of what it will ask for, but it expects health care and pension-plan protection similar to that given the Machinists, plus "significant salary increases," Bofferding said.
Above all, Bofferding wants tangible evidence that Boeing appreciates the key role played by its technical community.
The union's members are the keepers of the company's core expertise - designing and assembling airplanes and complex systems. For the good of the company as much as for his members, he said, that needs to be recognized.
"If you do a survey and ask: Do you think management respects and appreciates you and is doing everything to give you the best career possible? I don't think you'll get a majority saying yes," Bofferding said. "That's a dangerous indicator."
One thing he's after: a broadening of the company's profit-based incentive scheme to include SPEEA members.
Bofferding described the talks ahead as a "tipping point," when Boeing will either estrange or partner with the talent it needs to compete with Airbus.
Boeing response
The signals coming from Boeing suggest things may tip SPEEA's way.
In a top-level meeting in mid-July, Bofferding and his staff members met with Commercial Airplanes Chief Executive Alan Mulally and his senior people. Bofferding presented a chart posing a key rhetorical question:
"Does Boeing management respect and appreciate its technical community and are you willing to accept SPEEA as a partner to move the company forward?"
In response, "Alan nodded his head, seemed to say yes," Bofferding said.
In an interview yesterday, Mike Denton, Boeing vice president of commercial-airplanes engineering and one of the Mulally's top negotiators with SPEEA, seemed to have the same goal as Bofferding.
"The products on the horizon on the commercial side really make me feel optimistic about the future," Denton said, "Our engineers and technical people are a big part of that future. We want the negotiations to meet their needs."
Denton said that, while specific details would have to be nailed down in a comprehensive package, "good health care, competitive salaries and participation in an incentive plan are all going to be things we will support."
Engineers sought
The talks will take place amid a scramble for talent. When Airbus last week announced the launch of its A350 to rival the 787, Chief Executive Gustav Humbert said the company plans to recruit 1,200 engineers in the next 18 months to boost the program.
Boeing has been hiring engineers for two years now, as it prepares for 787 development and two large defense contracts - the Army's Future Combat Systems program and the Navy's Multi-Mission Maritime Aircraft, a military derivative of the 737.
With shortages in key areas such as structural-stress engineers, it has held hiring events in Canada and Europe to woo experienced workers from regional jetmaker Bombardier and from Airbus.
Locally, it has raided talent from smaller companies. Electroimpact in Everett and Quietwing in Kirkland report losing employees to their giant neighbor, including engineers who previously worked at Boeing that are being enticed back with lucrative compensation packages.
Boeing's mantra is that it will pay "market rates" and it is now conducting an industry survey that will form the basis for the compensation talks with SPEEA. Clearly, the strong market demand will bolster the union's leverage.
Partner or shrink
But management has leverage, too, said Richard Aboulafia, an industry analyst with the Teal Group.
"(The engineers) know that the future of their profession depends on keeping themselves competitive," he said. "Engineering is not immune from outsourcing."
Boeing has sent significant work to company engineering centers in Russia and Spain. It also is asking major suppliers to do more engineering. A SPEEA win that exacerbated the outsourcing trend would be a hollow victory.
Aboulafia is optimistic another damaging labor clash, such as the strike in 2000, won't happen.
"The biggest difference between now and 2000 is that Boeing looks less like a cash-extraction outfit," said Aboulafia. "For the first time in a decade, they are investing in the future."
In 2000, research spending was down and the next airliner program was uncertain. Now, the 787 has made clear that Boeing wants again to be No. 1 in world aviation.
It's in the interest of SPEEA to moderate its demands and be a part of that future, Aboulafia said.
Indeed, the prospect of ambitious engineering projects may be the most positive influence on the SPEEA talks.
Denton recalled being seated at a recent awards dinner beside a 67-year-old engineer still on the job at Boeing, who told him that he didn't want to retire because of the neat programs he was working on and the cool tools that are so much better than the ones he used years ago.
"There was a gleam in his eye," Denton said. "It's a really exciting time. We've got to find a way together to just allow us all to keep having fun."
Talks timeline
Nov. 1: Main negotiations begin at the Doubletree Hotel in SeaTac.
Dec. 1: Puget Sound-area contracts expire. Engineers and technical workers will have separate votes on a company offer. If it is rejected by either or both, the union will survey members and try to continue negotiations.
Jan. 2006: If further negotiations fail, the union could call a strike vote - but a strike wouldn't happen until the new year.
Source: SPEEA
Recent SPEEA contract history
One union collapse, two big ratification votes, one extended strike
1992: Despite an aerospace-industry slowdown, SPEEA members rejected Boeing's final offer.
But two months later - after a token one-day strike in
January 1993 - the union accepted exactly the same terms: a 6 percent bonus; wages for technical workers boosted 8 percent over three years, with additional merit pay increases; no wage increase for the engineers, but the merit-pay pool increased more than 16 percent.
After that show of weakness, SPEEA lost more than a third of its local members.
1995: After the 69-day Machinists strike, SPEEA members overwhelmingly ratified an agreement giving a 5 percent bonus and an average salary increase of 19 percent over four years.
1999: After offering concessions to avoid a Machinists strike, Boeing took a firm line in contract talks with
SPEEA. For the first time ever, engineers and technical workers went on extended strike in February 2000. After 40 days, the company granted performance-related cash bonuses totaling as much as $2,500 over 12 months and wage increases of at least 9 percent.
The outcome, seen as a big win for the union, strengthened it considerably. Only 54 percent of represented employees were dues-paying members in 1999; by 2002, membership was 88 percent.
2002: In a brutal industry downturn, SPEEA members quietly ratified a contract with a 6 percent bonus and 12 percent wage increases over three years.
Source: Seattle Times archives and SPEEA
SPEEA 2005 contract
The Society of Professional Engineering Employees in Aerospace (SPEEA) 2005 contract will cover 11,850 engineers and 5,700 technical workers in the Puget Sound region and 800 engineers in Wichita, Kan.
About two-thirds work in the commercial-airplane unit, the rest in the company's defense and space division. The commercial unit leads negotiations for the company.
Engineers: They design aircraft and high-tech aerospace systems, implement production, oversee manufacture, sign off on certification and provide after-sales support. Average salary, $82,000. Average age, 44.
Technical employees: A variety of designers, planners, drafters and programmers, they create technical drawings on computers, define the fabrication process, program and calibrate complex machine tools and write technical manuals. Average salary, $63,000. Average age, 49.
Source: SPEEA
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