Leeham News and Analysis

SPEEA-Boeing talks resume today; grim outlook

Flashback to 2000 strike: KPLU takes a look.

The war of words resumed yesterday in advance of contract talks that restart today at 1pm PT in Seattle between Boeing and its engineers’ union, SPEEA.

Even before parties reconvened, SPEEA yesterday issued a press statement outlining demonstrations to take place today:

Wednesday’s ‘Day of Action’ events are expected to draw from dozens at small sites to hundreds and thousands of SPEEA members walking inside and outside Boeing facilities in Renton and Everett. Boeing has drawn three Unfair Labor Practice Charges (ULPs) for videotaping and photographing union members at the events, confiscating cameras and the photographs they held. All of the marches have been peaceful. The ULPs are awaiting action before the National Labor Relations Board.

Both sides want an agreement without a strike, but SPEEA has been vocal for weeks, predicting talks will break down almost immediately because—in its view—the two sides are too far apart.

Boeing has a different view. The company notes that SPEEA at one point offered to extend its current contract, which Boeing rejected in part because health care and pension costs would remain unchanged. But the company points out that the current contract includes a 5% annual raise while Boeing’s current offer is 4.5%–just one-half of one percent apart. SPEEA has asked for 6% in the current negotiations.

Where the real differences appear to be are over those pesky health care and pension costs. SPEEA asserts that Boeing is asking for too much in the way of co-pays and other medical costs and that by changing the retirement plan from a defined benefit program to a define contribution to a 401(k), any raises offered by Boeing are negated and in effect result in losing money.

Boeing takes issue with this, saying that over the life of its contract offer, SPEEA engineers will receive $17,000 in raises and spend $5,000 in added medical costs.

As for the retirement plan, Boeing says the proposal for switching to a defined contribution to a 401(k) will be for new-hires only. Non-union employees throughout the company are on a 401(k) plan.

We view the current situation as grim. We think Boeing Chicago is misunderstanding the mood of SPEEA members, just as it did in the contract vote in October and as it did with IAM 751 in 2008.

But as we’ve written before, as one who pays 100% of our medical and retirement costs, we have little sympathy for Boeing wanting SPEEA members to pony up a greater share of health care costs. We also believe that defined benefit plans have unrealistic federal ROI assumptions that place an undue burden on companies. Update: we certainly muddled this statement. We’ve previously written that we have little sympathy for SPEEA not wanting to pony up more of its own health care costs, and this is our position.

At the same time, we recognize that SPEEA–along with the IAM–saved Boeing’s bacon during the debacles of the 787 and 747-8 development, and it’s also clear that neither program is running smoothly just yet.

We also believe that profit sharing, such as that proposed by Boeing, is a good employee incentive. But we also believe that Boeing Chicago tends to trend toward being too anti-union for its own good.

We don’t think there will be a quick resolution as talks resume today. SPEEA is planning job actions and it is making plans to shut down deliveries as soon as a strike occurs. The 42-day SPEEA strike in 2000 saw 50 fewer deliveries at a time when production rates were far less than today.

We hope cooler heads prevail, but we’re not counting on it.