Boeing Reaches Tentative 4-Year Deal With Engineers

By Susanna Ray

Nov. 14 (Bloomberg) -- Boeing Co. and the leaders of its second-largest union reached a tentative agreement on a four- year contract proposal today that would avert a second strike this year if members approve.

The 20,500 engineers and technical workers will have until Dec. 1, the day their current contract runs out, to study the offer and vote through mail-in ballots. Union leaders said today that they’ll recommend a “yes” vote on the offer.

“It’s an agreement that’s the result of extremely hard work by all parties,” Ray Goforth, the executive director of the Society of Professional Engineering Employees in Aerospace, said in an interview today. “We’re not giving out any details until the council sees it first,” which will happen in a meeting planned for 6 p.m. Seattle time.

Negotiators for Chicago-based Boeing and the union have been in talks in a hotel near the company’s Seattle manufacturing hub since Oct. 29, three days before the 27,000 machinists agreed to end an eight-week strike. That walkout, over job security and compensation, idled factories and cost Boeing more than $10 million a day in profit.

The machinist strike also contributed to a delay of as much as nine months in the new 747-8’s entry into service and pushed the first delivery of the 777 freighter into next quarter rather than this quarter, Boeing said earlier today.

“We believe we’ve offered a market-competitive contract and we will be releasing the details later this evening,” said Karen Fincutter, a Boeing spokeswoman. “We’re pleased we were able to reach tentative agreement.”

Dispute Over Contractors

Boeing fell $2.12, or 4.9 percent, to $41.04 at 4 p.m. in New York Stock Exchange composite trading. The stock has declined 53 percent this year.

The engineers, like the machinists, want limits on the use of non-union, temporary workers that Boeing employs to help control costs while developing and building planes like the 787 Dreamliner. The union wanted Boeing to agree to a set percentage of subcontractors.

Boeing and the union agreed to set the duration of the contract for four years, instead of three. The engineering group initially sought raises of 10 percent annually through 2011, more vacation days, higher overtime rates, a restoration of early retiree medical benefits and changes to the health-care and pension plans.

The more than 13,000 Boeing engineers in Washington state, Oregon, Utah and California make an average of $88,000 a year, and the nearly 7,000 technical workers average $67,000. The union calls Boeing an “island of success” in the slumping economy, because of its record profits and unprecedented $276 billion order backlog, and says employees deserve a greater share of the work and the earnings.

Boeing’s Demands

Boeing has said any contract improvements must be affordable even if there’s a future slowdown and that it needs outsourcing flexibility to stay competitive. It initially asked that engineers shoulder more of their health-care costs and that new employees be offered a 401(k)-style retirement plan rather than the current defined-benefit pension program.

Engineers have only walked out twice since their union was founded in 1946: for one day in 1993 and for 40 days in 2000.

The 27,000 machinists, who stopped work Sept. 6, voted Nov. 1 to accept a proposal that included a 15 percent raise over four years, higher pension payments and starting wages, job security for maintenance and parts-delivery workers and the ability to bid for more work that Boeing’s considering outsourcing.

A strike by engineers, who design the planes and oversee their manufacture, would extend jet-delivery delays, hurting airlines worldwide that are counting on newer models to ease fuel consumption. Boeing and its larger rival, Toulouse, France- based Airbus SAS, have about seven years’ worth of aircraft orders to fill.

To contact the reporter on this story: Susanna Ray in Seattle at sray7@bloomberg.net.

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