Leeham News and Analysis
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Leeham News and Analysis
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Pontifications: Boeing to focus on “long-term liabilities” in 2016’s SPEEA contract negotiations
By Scott Hamilton
Nov. 16, 2015, © Leeham Co. Boeing will target “long term liabilities” in its contract negotiations with SPEEA, the engineers union, its president quoted CEO Dennis Muilenburg as telling him in September.
Ryan Rule, president of the local SPEEA union, met for an hour with Muilenburg when he was here for a visit by China’s president Xi Jinping. Rule termed the meeting cordial. He told Leeham News last week that Muilenburg wasn’t specific about the “asks” Boeing will seek in contract negotiations next year, citing only “long term liabilities,” which Rule took to mean health care and pension benefits.
Ryan Rule (left) and Jon Holden, presidents of the local SPEEA and IAM 751 unions at Boeing Commercial Airplanes in the Seattle area. Photo via Google images.
Boeing has aggressively sought to reduce health care and pension costs in recent contract negotiations. SPEEA members who joined Boeing after 2007 have different benefit levels than those before 2007. Rule believes Boeing will seek to revise the terms of benefits for this group. If so, negotiations could be contentious: SPEEA’s most recent contract negotiations, in 2012, also involved Boeing’s request for give-backs.
In November 2013-January 2014, Boeing and the local International Association of Machinists District 751 came to bitter loggerheads over Boeing’s demand for benefits give backs in exchange for siting the 777X Final Assembly Line and wing production in Puget Sound (ultimately, Everett). IAM 751 members rejected the contract revisions on the first go. In a controversial move, the IAM Headquarters forced a second vote right after the Christmas/New Year’s holiday, when many members were still on vacation. The contract revisions were approved by a narrow margin.
Muilenburg hasn’t met with 751 president Jon Holden since becoming CEO last June, Holden told Leeham News last week.
Rule said he hopes management-labor relations will improve under Muilenburg, but the two labor leaders noted that Muilenburg was on the Boeing Executive Committee with former CEO Jim McNerney, whose relations with labor descended into open warfare.
Still, Rule reported that Muilenburg “said all the right things” when he met with him during President Xi’s visit.
The SPEEA contract becomes amendable next September. This will be Muilenburg’s first test as CEO of The Boeing Co. with labor contracts. He previously was CEO of Boeing’s Defense unit, where IAM 837 was the principal union. Much to the chagrin of 751 leadership, 837 voted for givebacks before 751, setting a precedent.
How Muilenburg sets the tone for SPEEA negotiations next year will be closely watched by all the Boeing unions, shareholders, the Board of Directors and Wall Street.
Ok, so all the business people say Boeing has to kill things like health care and pensions (yes, I know, reduce the costs, but who doesn’t believe this is the long term goal?) but the big question is this going to be another round of take or will there be some sort of give from Boeing.
Of course, I don’t mean a give of the type where they are allowed to keep their jobs.
IMO- a major issue will be the Healthcare game driven largely by the Unaffordable Care Act also known as Obamacare. Boeing plan is no doubt considered a ‘ Cadillac ‘ Plan so the unions support of The Democrats who passed it will come back to haunt them. As a retiree under the old plan, between spouse and myself, and not including medicare- we pay over $6000/year for the Boeing Supplemental. Boeing as I understand it lumps ev eryone together for coverage costs. Unless SPEEA gets some knowledgeable- competent help from the outside, and even then- I have this wunnerful feeling we will get the biggest screw job in decades.
As to pension- the same comment applies- GET OUTSIDE PROFESSIONAL HELP . The ” look a squirrel chase” incorrectly promoted by SPEEA staff during the last negotiations with the phony cry of ‘ scrap the cap ‘ on SS taxes was a major disservice to the members. Even though BA ( being forced to tell the truth under ERISA ) tried to explain the existing 3 formulas for pension calculations which proved the falsity of the argument-few paid attention -with the newer members being essentially sold out.
For Boeing- whose McNerney is also on the IBM Board- one can expect the newest semi- hose job known as ‘De-risking ‘- which on the surface is no real change. This is where the company sells/transfers its Pension Oblicgations under ERISA to a supposedly competent Insurance company, thus the argument that there will be no change for existing retirees. And that will be mostly true. Except that by doing that- ERISA protections will no longer apply. Thus the low interest games under the FED ( making it difficult to get the 5 to 8 percent returns needed to keep funds solvent ) may well force the subtle reductions in Pension benefits for those currently employed. As a start to become familiar with what the current plan really says- the union members should ask SPEEA for a copy of the current Plan Documents ( that is the LEGAL plan Documents )- not just the well publicized SPD Summry plan documents. IF a member asks for such- the company has 10 days to provide to union- otherwise BA has no need to keep the union copy current- and the SPD needs only be changed every 3 to 5 years.
I’m sure the members will be thrilled to find in the Plan Documents the bit about up to 10 years additional credited service for ex- employees now working full time for the union. That made a lot of sense decades ago due to paperwork issues, and a certain amount of sense even nowdays. But why kept a secret from Joe and Mary Sixpac ?
For some ‘ strange’ reason that is not mentioned in the SPD. 😛