Boeing seeks ‘sweet spot’ in SPEEA contract

EVERETT -- Staying competitive by keeping costs reasonable is a top priority for Boeing Co. leaders as they negotiate a new labor contract with the union representing 21,000 engineers and technical workers in the Puget Sound region, the company says.

"My objective is to have my engineering team intact" to work on future development programs, like the 777X and 787-10X, and the next all-new airplane program, said Mike Delaney, vice president of engineering for Boeing Commercial Airplanes.

That means the Chicago-based company can't be too out of whack with other aerospace companies in terms of pay and benefits. Delaney wants to find the "sweet spot" that keeps engineers' and technical workers' compensation packages market-leading but doesn't hurt Boeing financially.

The problem: Representatives from Boeing and the Society of Professional Engineering Employees in Aerospace can't agree on a definition of market-leading. The past few months, the two sides have seemed at odds over which companies are comparable to Boeing.

That's not a promising sign, given that SPEEA's contract expires Oct. 6 and that Boeing and union officials first started talking in the summer of 2011. Negotiators for both sides will continue meeting on a regular basis, though Boeing isn't expected to make a complete offer until mid-September.

In mid-June, the union presented a list of demands to Boeing that included increasing vacation accrual rates and giving members a 7.5 percent annual wage increase. Delaney described the union's proposal as "fairly largesse" given that the national average for annual wage increases in the industry is 2.8 percent.

If the company agreed, Delaney said, Boeing would be paying engineers 25 percent to 30 percent above market wages over the life of the contract.

Pension and health benefits also are major stumbling blocks for Boeing and SPEEA to clear. Non-union workers at Boeing, as well as many of the company's other unions, contribute money toward health insurance. SPEEA members don't, which Boeing wants to change.

The company wants to control escalating pension costs by offering a 401(k) plan to new engineers and technical workers rather than a defined pension. Although SPEEA executive director Ray Goforth says the union is willing to talk about another type of retirement plan, he won't support a cut in overall retirement benefits.

Boeing dismissed an offer by SPEEA to extend the union's existing contract, which includes wage increases of 5 percent, saying the contract inked in 2008 is "unsustainable."

"We were behind the market. ... We've now gone ahead of the market," said Todd Zarfos, Boeing vice president of engineering for commercial aviation services.

Company officials say they put together a "fairly lucrative" contract in 2008, when Boeing needed local workers more than ever to get the troubled 787 and 747-8 programs back on track. But Delaney disputed the idea that Boeing didn't appreciate or respect workers.

"You're telling me I don't appreciate those guys?" said Delaney, who was chief engineer on the 787. "I don't accept that."

Rather, Delaney said, SPEEA is seeking an emotional response from members who remember the union's only major strike in 2000. That year, engineers went on strike for 40 days, citing a lack of respect.

SPEEA's Goforth has questioned Boeing's commitment to engineering in light of the retirement of Jim Albaugh, president of Boeing Commercial Airplanes. Goforth asserted the tone of negotiations changed for the worse when Albaugh announced plans to leave this summer. The union's claims came as reports surfaced that Boeing was slowing 777X development, partially because of a shift of direction at Boeing.

Delaney called the assertions a "red herring."

"It's made for TV," he said.

The change in tone in negotiations, Zarfos said, came from SPEEA leaders who are impatient to see a full contract offer. Union negotiators have told Zarfos they're uninterested in SPEEA's relationship with Boeing, they just want the company's proposal. In an interview last week, Goforth said the opposite.

For more on SPEEA and Boeing negotiations, go to Boeing's website at boeing.com/speea-negotiations or SPEEA's website at speea.org.

Michelle Dunlop: 425-339-3454; mdunlop@heraldnet.com.