Military

Boeing, Engineer Union Reach Agreement on the Easy Stuff

Paul Ausick

Published: January 14, 2016 8:25 am

Last Updated: January 13, 2020 3:04 pm

After markets closed on Wednesday, Boeing Co. (NYSE: BA) and its main engineering union, the Society of Professional Engineering Employees in Aerospace (SPEEA), announced a tentative agreement on a six-year contract extension. The agreement was reached nearly 10 months before the current contract is set to expire in October.

One reason for the smooth negotiating process was that the two sides agreed to set to one side those issues on which there was little chance of agreement. The union’s executive director, Ray Goforth, told Leeham News that these issues would need to be settled by the courts, the state legislature and government regulators such as the National Labor Relations Board (NLRB).

The union did not withdraw any complaints that already have been filed against Boeing and the SPEEA, and the machinists union will continue its efforts with the legislature to claw back jobs lost on the 777X program. The state of Washington gave Boeing $8.7 billion in incentives to build the 777X in Washington without including a provision requiring the company to keep jobs in the state.

Another reason for the early settlement was a change at the top. Goforth told Leeham News that the agreement “would not have happened without Muilenburg,” referring to Boeing CEO Dennis Muilenburg, who took over as chief executive officer from James McNerney last July. McNerney was well-known for his hard-nosed approach to negotiations. Goforth said, “This process would not have happened if Muilenburg hadn’t blessed it.”

According to Boeing’s press release, the tentative agreement includes a “commitment to limit layoffs due to work movement, should it become necessary.” The SPEEA’s press release went into more detail:

Management is committing to use exhaustive efforts to place individuals impacted by [moving work]. 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. This protection, along with the doubling of the existing voluntary layoff benefits, would take effect immediately after ratification.

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Another big change is the switch from a defined-benefit retirement plan to a defined-contribution plan for employees hired before March 2013. The transition will take place on December 31, 2018.

The agreement also increases union members’ pay to “above-market compensation for their skills,” according to Boeing and includes some changes to health care benefits. According to a report in the Seattle Times, compensation increases average 5% for each of the five years between 2017 and 2022.

Union members are scheduled to vote on the agreement between January 27 and February 10 by mail-in ballot. The SPEEA is a local union associated with the International Federation of Professional and Technical Engineers and represents 23,000 workers in Washington, Kansas, Oregon, Utah, California and Florida.