<< Previous   of   Next >> The Boeing Co.  (click to enlarge) The Machinists Union and Boeing opened contract talks Friday on a new labor agreement for more than 26,000 employees, largely in the Seattle area, Portland, Ore., and Wichita, Kan. Exchanging positions at the IAM 751 union hall in Seattle are (standing, left to right) Tom Wroblewski, District 751 president; Mark Blondin, aerospace coordinator; and Tom Buffenbarger, International President, from the IAM; and Doug Kight, Boeing vice president of human resources; and Tom Easley, Boeing labor relations director.

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Boeing, Machinists focus on issues as contract talks begin

By Michelle Dunlop
Herald Writer

EVERETT -- The Boeing Co. and its Machinists union kicked off contract negotiations Friday, outlining issues that need to be resolved before their labor agreement expires in September.

"We are in the strongest bargaining position we have had in years," said Tom Wroblewski, president of the local district 751, based out of Seattle. "By any measure, Boeing is one of the most successful companies in the world -- sales, profits, backlogs -- and our members are a huge part of that."

Officials from both Boeing and the International Association of Machinists and Aerospace Workers exchanged initial proposals at a meeting Friday in Seattle.

Key topics in those proposal include wages, possible changes to the pension plan for new Machinists and the separation of Boeing workers in Wichita, Kan., from the Western Washington bargaining group. Additionally, Boeing expressed an interest in signing a contract that would last longer than the standard three-year deal it typically negotiates with the union.

Boeing, which employs more than 23,000 Machinists in the Puget Sound region, has received record jet orders in the past two years. With 3,600 unfilled orders for commercial jets, Boeing's backlog has soared to $271 billion. The company depends on its Machinists to assemble aircraft in Everett and in Renton.

"Boeing is committed to providing employees with outstanding pay and benefits, and we intend to reward employees for generating productivity improvements that help us meet our commitments to customers and win new business," said Doug Kight, the Boeing vice president of human resources responsible for these negotiations.

Both Boeing and its Machinists agree that starting wages for entry-level workers need to be increased in order to stay competitive in the marketplace. The jetmaker is not proposing a raise for the 70 percent of union workers who have reached the top of the IAM's pay scale, a level Kight said is in line with the market.

Union-represented Machinists earn an average of $56,000 annually before overtime, Boeing said. In addition, Machinists receive benefits valued at more than $24,000 annually. Combined, total compensation for IAM-represented employees -- including overtime pay, lump-sum wage payments and other benefits -- is valued around $91,500 per year.

Boeing said it wants to discuss performance-based pay incentives with the union.

"Boeing's success is a direct result of the hard work and efforts of our members, who deserve a bigger share of the profits they helped create," Wroblewski said.

With health-care costs increasing, Boeing believes employees should pay a greater percentage of the costs though the company plans to continue to offer a no-contribution plan for employees. The manufacturer wants to discontinue health coverage for new Machinists who retire early -- a point of contention with the union.

Boeing also wants to end its pension plan for new employees and offer them a 401(k)-style plan instead. The company said its pension costs have grown at an average of 7 percent a year, a rate Boeing labels as "unsustainable." Machinist-represented workers have a 401(k) and a pension plan that vests after five years. Kight estimated Boeing's pension liability is $46 billion.

He said the "enhanced" 401(k), into which Boeing would contribute a lump sum based on the worker's wages, would pay a monthly amount similar to the existing pension plan plus the regular 401(k).

The Machinists have threatened to strike over such a change in pension plans. The union last staged a monthlong strike against Boeing in 2005.

Negotiations come at a time when Boeing tries to get its latest commercial airplane, the 787 Dreamliner, back on track, following a 15-month delay of its first delivery. Boeing also is working to deliver its first 777 Freighter and build a revamped 747.

Although Boeing would escape some penalties for late deliveries caused by a labor strike, the company's market position and reputation would suffer. Boeing already faces penalties from customers of its delayed Dreamliner jet.

The company outsourced the manufacturing of major 787 assemblies to its global partners over the protests of its unions. Boeing employees in Everett complete the final assembly work on the Dreamliner. As Boeing has struggled with its 787, the unions have expressed their desire for the company to bring back more work. Boeing officials have said that bringing back outsourced work is not an option in contract talks.

"Boeing parted out the 787 because they wanted to save a buck," Wroblewski said. "That decision has cost them billions because they have had to buy out suppliers and pay late delivery penalties. It's time Boeing reinvested in the infrastructure of their skilled work force."

The Associated Press contributed to this report.

Reporter Michelle Dunlop: 425-339-3454 or mdunlop@heraldnet.com.