Leeham News and Analysis
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Leeham News and Analysis
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SPEEA rejects Boeing contract; negotiations commence; no strike possible till after Nov. 25
SPEEA, the engineers union for The Boeing Co., rejected the company’s proposed contract Monday by a 96% vote margin. The Seattle Times has this story.
Boeing issued this statement:
The SPEEA negotiations team notified Boeing that SPEEA’s membership rejected Boeing’s initial contract proposal. Our focus now is on resuming discussions on October 2 with your negotiations team.
In the spirit of good faith, we will continue to listen closely to your negotiations team. We want to understand your viewpoints and objections, which is what the bargaining process is all about. As was true when we made our initial proposal – we are committed to continuing discussions, answering questions and considering any proposals or counter-proposals from your negotiations team.
While Oct. 6 is the expiration date of the contract, it remains in effect until Nov. 25, 2012. On Nov. 25, the contract will terminate as a result of SPEEA filing a 60-day termination notice per Article 23 of the contract. No strike can take place until after Nov. 25.
We will continue to provide updates on the progress of negotiations and encourage you to check the negotiations website on a regular basis.
We expect the negotiations, which commence at 1pm today, to be difficult. Boeing is determined to reduce health care and pension costs; SPEEA is determined to prevent higher cost sharing on heath care premiums and shifting new employees from a defined pension plan to a 401(K) plan. Boeing offered raises of 2.5% to 3% and the union wants 5%. But, as The Times story notes, the big sticking point right now seems to be the union’s assertion that Boeing has language in the proposed contract that will allow the company to unilaterally change terms and conditions at a later date, particularly for current retirees on health care. Boeing says it has “no plans” to do so, which SPEEA labeled weasel words.
Boeing threatens to move engineering jobs out of Puget Sound (30% of engineering is already outside of the Seattle area), but SPEEA claims Boeing’s defense unit is already doing so.
Although there are no sanctioned job actions by members, there have been reports of work slow-downs. We expect these actions to increase.
The last time SPEEA struck, in 2000 for 40 days, Boeing’s deliveries dropped by 50 aircraft.
I think enough drama and theatrics have been exercised already and now is the time to get down to realistic and earnst negotiations. There is plenty of time to engage in a serious dialogue and there are enough areas to make mutual accomodations and create a workable solution that can satisfy both sides. Boeing says it is open to “understanding all viewpoints and objections”. If so, and SPEEA will do the same, there is no reason why a new Contract will not be satisfactorily achieved.
This is an opportunity to reset trust and appreciation between Management and the Engineers. It was accomplished for IAM and can be done here too.
…. But, as The Times story notes, the big sticking point right now seems to be the union’s assertion that Boeing has language in the proposed contract that will allow the company to unilaterally change terms and conditions at a later date, particularly for current retirees on health care. Boeing says it has “no plans” to do so, which SPEEA labeled weasel words….
Riiiiight – BA tried the same thing re wording in 2005 and 2008 with the IAM – and of course did remove early retiree benefits for new hires and non union types a few years ago.
And BA took advantage of a poorly worded LOU ( letter of understanding ) to tag ALL former SPEEA Bargaining unit members with a fee for software unusable by any retiree who still had funds in a Boeing Plan …
http://tinyurl.com/BA-RETIREE-RIPOFF
and thats a fact Jack !!!
Don, These issues can all be addressed by SPEEA and do not sound like “deal breakers”. I think both sides put up their “starting” lines and now that many issues have been aired and indicated, progress was actually made in terms of understanding. SPEEA looks like it is doing a good job of representation and Boeing has a chance to revise its offer. This appears to be a ritual and necessary for all parties to finally settle down and come to terms.
My comments were posted to show typical- and long standing gotchas used by Boeing and their PR machine. Unfortunately the BA PR has usually snowed the press with such comments as XX% increase in pension ” which only affects a few- and provides NO change in pensions for the majority.
In my link- if one reads it- you will find that BA admitted they did not negotiate that fee for retirees with speea but just imposed it. true it is not a great deal of money- but the ability to do that was hidden from everyone.
traditionally, when IAM or SPEEA ask if BA is willing to discuss retiree issues – the answer has been the equivalent of ‘ go -pound sand ‘ .
The chicago bean counters are using political math to make their points- which has little bearing with reality.
I’ve dealt with those types and the Board of Directionless and a few top level executives over the years before and after retirement. Very few were reasonable- or upfront.
Those that were did not want to be quoted- but did work issues behind the scenes. The rest acted more like movie versions . .
Don, Both sides have their agendas and many executives and Boardmembers of BOTH Management AND SPEEA could not be characterized as “reasonable or upfront”. Its the nature of Organizations…many are fighting for their position, job or something self serving.
Somehow or other, the process works through these imperfections and manages to come to terms…sometimes better than other times. I am hoping this will be a better time and maybe address some of your longstanding issues.
Yep – the BA board is supposed to work for the shareholders- object is NOT to make planes but to make money. And SPEEA Board and Staff and Negotiation team is supposed to work for the bargaining unit members. Thats nice theory- and currently both sides seem to be somewhat deficient and/or math challenged. But BA has a much bigger bench of experts than SPEEA.
Consider that SCOTUS in a Cigna case regarding pensions said it was not nice to lie to employees in the published documents regarding benefits. So after several years of battle in lower courts, the retirees won simply because the real documents that mattered had been suppressed.
Now lets take a look at the PAP and Flapdoodle presented by Boeing
http://boeing.com/speea-negotiations/docs/082312_Boeing-Retirement-Proposal-on-BCERP.pdf
and here is a simplified plot of what it really means- which has not been changed for decades for the higher paid types. Which BA admits is now the majority.
http://tinyurl.com/BCERPEXAMPLE
Now add to that the barf about earnings on pension and 401k of 6.5 to 7.5 percent return on investment- meanwhile claiming hard times in the Billion $$ BA pension plan due to low returns somewhat less than the 6 to 7 percent they claim retirees can earn.
How many do you know who can beat the 10 to 20 year average returns ( not counting inflation ) of a VERY large pension plan with discounts and professional management ?
Don, Am not trying to be smug or dismissive. The best arrangement would be for Management and Labor to work closely and be supportive of one another. The Board should be a fiduciary of the Company since their role is to serve the Corporation, its Officers and shareholders. But this ideal arrangement has not worked out well for Boeing and its relationship with Labor has been particularly troublesome. I have read various explainations as to why this evolved but its reality has been expressed with multiple disputes. You would indicate its Boeing’s duplicity and I could argue it is changing nature of organized labor as well as a changing competitive world, In either case, this clash threatens both parties and has created a dynamic that must be resolved.
What has happened in the past is either readdressed, if possible, or put aside as a wound from this ongoing battle. Management has made some costly errors and Labor has created some unnecessary dislocation. Perhaps these are just the result of the issues facing large multinational organizations.
In summary, what I am trying to express is that each negotiation presents an opportunity to create an new arrangement but it occurs in a changing world where the circumstances and marketplace affects both parties. The pressures on both Labor and Management vary from period to period and its history cannot be dragged along to each Contract with a sense of an open wound. Each negotiation should start with the items to be addressed and when an Agreement is struck, it should be complete and settling.
There has been less antagonism with SPEEA in the past and I hope that this negotiation would give Management and the Engineers a chance to realign and come to an Agreement that enables SPEEA members to feel appreciated and compensated accordingly yet accomodate to the needs of the Company and the competitive environment that it is working in as well as a recognition of the costs of engineering in a dynamic world economy.
As a result of exchanges and criticisms during the voting process, Boeing immediately changed language so the issues of coverage during military leave and payment for dental care were eliminated. They also retracted the language about “unilateral” decision making which troubled SPEEA’s interpretation and reverted back to the original language in the prior agreement.
Clarification and dialogue can reverse misunderstanding and help move towards a satisfactory resolution of conflicts
BA investor ?? BA tried exactly the same thing in 2008 From the IAM publication quoted below, and they also tried it in 2005. There was NO misunderstanding by Boeing- They knew EXACTLY what they meant and planned to do as they had done it to the non represented.
Strike Preserves
Retiree Medical
Perhaps one of the most disturbing
changes Boeing tried to slip into their
September 3rd offer pertained to retiree
medical. While Boeing announced publicly
they would back off their proposal
to eliminate retiree medical for future
hires, they put a more devious takeaway
clause buried in the fine print of the 9/3/
08 proposal.
Boeings language, as printed in the
offer members rejected on September
3rd, would have taken those who are
already retired (current retirees) out of
the scope of the Agreement – threatening
their coverage. Just as disturbing is the
implication of Boeing’s proposed lan-
guage on current active members. The
Company’s 9/3/08 language basically
provided coverage only for active employees
who retire during the term of this
Agreement. If this three-year agreement
expired, so would the contractual guarantee
for retiree medical benefits of those
newly retired members. If you planned
to retire during that contract, this would
be very important because if that language
had been implemented, then after
this contract we could no longer negotiate
on your behalf.
As Union negotiators, this was one of
the most frustrating issues – realizing
Boeing’s intent was to threaten our current
retirees and limit the Company’s
future liability with word games. While
Boeing said they didn’t intend to change
these benefits, without the contract lan-
guage there would be no guarantee AND
Boeing was refusing to put in writing that
they would not change these benefits.
The Union was left in a tough spot.
The Union was left in a tough spot.
Because of a Supreme Court ruling over
four decades ago, retiree benefits for those
already retired are non-mandatory subjects
of bargaining; therefore, a Union
cannot require an employer to bargain
over the benefits of past retirees. More
importantly, it also means a Union cannot
make health care benefits for past retirees
a strike issue. That is why the Union
could not mention retiree medical in our
summary or recommendation for 9/3/08.
Since the Union had to ensure retiree
medical for past retirees was NOT a strike
issue (because that would be illegal), the
Union simply instructed members to read
the Company’s proposal closely.
Had Boeing succeeded in getting this
language approved by the members, they
would have faced legal action for unilaterally
stripping retirees of their medical
benefits. These cases turn on interpretations
of a medical plan’s governing documents
and whether the documents promise
a “vested” lifetime benefit or not.
The success of these claims depends a
great deal on the governing documents
themselves and the statements and promises
made by the employer. Should
Boeing ever succeed in getting this language
into an IAM contract, the Union
will pursue legal action to challenge any
change to benefits for current retirees.
In the meantime, Unions will continue
to fight in the legislative arena to
get the right to bargain for the retired
members who came before us. Until then,
read the fine print in each proposal (especially
Sections 11.3 and 11.4)
I rest my case
Now read the Boeing response
http://boeing.com/speea-negotiations/100212_message.html
Because of a Supreme Court ruling over
four decades ago, retiree benefits for those
already retired are non-mandatory subjects
of bargaining; therefore, a Union
cannot require an employer to bargain
over the benefits of past retirees. More
importantly, it also means a Union cannot
make health care benefits for past retirees
a strike issue. That is why the Union
could not mention retiree medical in our
summary or recommendation for 9/3/08.
Since the Union had to ensure retiree
medical for past retirees was NOT a strike
issue (because that would be illegal), the
Union simply instructed members to read
the Company’s proposal closely.
Had Boeing succeeded in getting this
language approved by the members, they
would have faced legal action for unilaterally
stripping retirees of their medical
benefits. These cases turn on interpretations
of a medical plan’s governing documents
and whether the documents promise
a “vested” lifetime benefit or not.
The success of these claims depends a
great deal on the governing documents
themselves and the statements and promises
made by the employer. Should
Boeing ever succeed in getting this language
into an IAM contract, the Union
will pursue legal action to challenge any
change to benefits for current retirees.
In the meantime, Unions will continue
to fight in the legislative arena to
get the right to bargain for the retired
members who came before us. Until then,
read the fine print in each proposal (especially
Sections 11.3 and 11.4)
Don, This is getting too complicated for my grasp. The issues are beyond my understanding.
All I am a proponent of is reasonable negotiation for both Labor and Management….if possible. You feel that the playing field is not even and introduce the subject of a Union’s desire to get the right to bargain for the prior retired members…and Boeing’s desire to assert language that will undermine that effort.
There is a Supreme Court holding on this and Legislative attempts to change things….this seems to be something that is the Union will involve itself with but is not central to arriving at an Agreement that can settle the present issues and avoid a work slowdown or strike. I assume that SPEEA reads the fine print in each proposal
>>You feel that the playing field is not even and introduce the subject of a Union’s desire to get the right to bargain for the prior retired members..
NO – thats not it at all – My point IS and WAS that Boeing has tried to subvert the contract language wherever possible and are using the same playbook they have used for over a decade. Anywhere else that would be the definition of insanity.
Add to that the press rarely presents either side in an unbiased manner- or bothers to check so called facts. The result is not much different than a political campaign. And in this state at least, truth is NOT a requirement for political speech, and as shown apparently not for negotiation PR.
It becomes as usual a game of gotcha, and if challenged, stonewall and attack the other side. Many SPEEA engineers are puzzled as to who figured and how figured the so called numbers for average pay came from.
For but one example – conundrum . SPEEA dues are based on 85 % of average hourly rate for ALL SPEEA. ( including about 3K in wichita) Dues are $ 38.47 as of jan 2012. based on compensation data provided by Boeing for ALL bargaining unit.
That means average hourly rate ( base) is $ 41.72.
times 2080 hours/year = $86,797.
Now engineers make up about 2/3 of members, techas about 1/3
So how does one get 110K for the average engineer ?
Point again is – the PR by both sides has a very “loose” match with reality. Comparing an engineer with a walmart clerk or similar company doesn’t cut it either>
Why not sit back – relax- and watch the blinking lights ??
Don, I am beginning to see blinking lights as a result of this exchange. But I must agree that we both see political campaigns in the same light!
SPEEA is a Union that represents over 25,000 members. It should have able staff to read between the lines which it seems to be doing. Despite a decade of effort to “subvert” the Contract language, it has been unable to accomplish this and there are watchdogs out there like yourself that continue to raise awareness of various issues.
I would expect that many of the realities that you point to are brought up in negotiations or certainly should. The press does get these things accurately but it is not public opinion that has been determinitive but the action of the union and its members. IAM and SPEEA have been exerting quite alot of leverage.
Both SPEEA and Boeing must know the underlying truths…these are the subjects that get negotiated and “traded”.
I am not sure where this is all leading to….I am an outsider who is disturbed by the exaggerations and drama that seems to be a ritual of Management Labor dialogue. You are even more disturbed and think it is a form of “The Twilight Zone”. So, what do you propose? What is necessary to hold the lights steady? Is it possible?
CORRECTION: Above Para 3 “the press does NOT ALWAYS get these things accurately..”
for example I said . . .For but one example – conundrum . SPEEA dues are based on 85 % of average hourly rate for ALL SPEEA. ( including about 3K in wichita) Dues are $ 38.47 as of jan 2012. based on compensation data provided by Boeing for ALL bargaining unit.
That means average hourly rate ( base) is $ 41.72.
times 2080 hours/year = $86,797.
OK to solve this, there are 23,400 bargains unit members ( source dol files as of march 2012, including 250 or so religious objector and 1339 feepayers )
To get an overall average of 86797, it takes approx 15210 engineers at average of 103,500 plus 8190 techs at average of $ 55,740 for base wages.
Thats quite defference from the 110 K and 79 K numbers
gotta go
Don, Perhaps overtime is included at higher rates. In any event, SPEEA should know what the salary ranges are for its members.
This is not a satisfactory answer to the larger question of what you think is necessary to improve Management Laabor relations.
no overtime is NOT included
But to improve management -labor relations takes at least four factors
1) ethics
2) honesty
3) common sense
4) do the right thing for the members or shareholders
At best both sides (for differing reasons ) might be able to claim one or two
And on both sides – the defined team does not have contol
BA team is run by the Chicago- MCBoeing-GE types
SPEEA team is hostage to Staff Bullying
SPEEA can afford to use outside competent consultants but that is rare to almost non existant
Boeing has a very large and competent back bench – but is overridden by egos and an up the employee mantra-
IMHO- despite all the PR and flapdoodle – a strike in Jan-FEB is reaching at least a 50 percent probibility.
Nothing of signifance is likely to happen before elections- fora variety of reasons, not the least is the free pass to BA for NOT sending out warn notices on Nov 1
They will have a perfect excuse come Nov 1 to avoid sending out WARN notices
Unless the secrestration(sP) game is spiked- that exccuse can be used to trim
bucu jobs and get a free pass from the goobermint !
Dont believe that ?
read it for yourself
http://www.whitehouse.gov/sites/default/files/omb/memoranda/2012/m-12-19.pdf
Bottom line – IF that happens- the Goobermint virtually guarantees that the
taxpayer will pay all legal costs, and all fines, repayments, etc for failure to
follow federal law.
Ok, Don. This is interesting but way beyond my grasp. Seems like there are factors that intrude and interfere with an outsider/shareholder understanding…and these brief exchanges are not the forum but do show the complexity and tensions that are part of the negotiations.
Thanks for responding to what appear to be naive questions. I hope things work out so that a satisfactory Agreement is put in place and Boeing and its Engineers resolve some differences and the Company continues to build and develop superior aircraft AND makes a decent return for its shareholders.
I have little to add to a better understanding and will follow these developments with the help of Leeham News and Comment and your occasional contribution.