Boeing labor negotiator wants pension-plan change for new hires

Seattle Times aerospace reporter

Boeing’s top labor negotiator, Doug Kight, has an uphill battle ahead as the company undertakes difficult contract talks with both major unions this year. And one of his proposals — for enrolling new hires in a 401(k)-style retirement plan instead of the existing Boeing pension plan — won’t make things any easier.

Relations with the white-collar engineering union already are so strained that the union’s new executive director, Ray Goforth, talks openly about the potential for a strike.

“We can absolutely do it,” Goforth said. “I have every confidence members will stand up for themselves if necessary. The union is pretty darn unified.”

And the company proposal on pension benefits, which Kight laid out in an interview Thursday, drew a fierce response afterward from Machinists leader Tom Wroblewski.

To cut Boeing’s enormous future pension liabilities, Kight said he’ll propose to both the Machinists and the engineers to replace the employee pension for all new hires with a 401(k) plan supplemented by a company contribution.

“This is unbelievable,” said Wroblewski, district president for the International Association of Machinists (IAM) Local 751, on hearing of the idea from a reporter. Although Kight had previously informed engineering union leaders of the proposal, he hadn’t mentioned it to Wroblewski.

Wroblewski said that in 2005, when Boeing proposed taking away retiree medical benefits for new hires, “it ended in a strike … This is unacceptable. I’m sure our members will walk again.”

As mechanics work frantically to complete assembly of the first 787 Dreamliner, and engineers and technical staff members prepare for the new jet’s first flight later in the year, a standoff with either the Machinists or the engineers could further delay the airplane.

“We’re going to have disagreements,” Kight said. “The key, as leaders, is how you respond.”

Bargaining with the IAM opens May 9. Wroblewski leads a union representing more than 27,000 workers in the upcoming talks.

About 25,000 of those are in the Puget Sound area. The remainder are at plants in Portland and Wichita, Kan., with a small contingent at Edwards Air Force Base in California.

The Machinists’ 2008 negotiations slogan is “It’s our time this time!”

Said Kight: “I wish we were half as good as the IAM at crafting great slogans.”

Priorities for the Machinists include a general wage increase, especially for younger workers, along with protecting benefits. And Wroblewski has said he wants the Machinists to have an incentive pay plan.

Some common ground

That agenda at least provides some common ground with company.

Kight said Boeing will propose a wage increase, particularly for entry-level workers, and also an incentive pay plan tied to productivity gains and based on set targets close to the shop floor, so that workers know exactly what they have to do to earn the extra pay.

But the proposed pension change for new hires will be a difficult issue.

Kight said Boeing’s current pension plans are “top-of-the-market,” premium plans, but they impose a heavy liability of $46 billion far out into the future. He said Boeing’s plan for a 401(k)-type savings plan “enhanced” with a flat company contribution “retains a premium place in the market while at the same time it addresses the financial concerns.”

“We want to talk to both unions about it,” he said.

But it seemed like a nonstarter for Wroblewski. The fact that the proposal would not affect current employee pensions is irrelevant, he said.

“Past, present, future, it doesn’t matter. We fight for all of our members. You’re fighting for the unborn,” Wroblewski said. “Our members didn’t fall for it in 2005. They won’t fall for it this time.”

The Machinists have struck Boeing six times since 1948, including a 69-day walkout in 1995 and a one-month strike in 2005.

Formal negotiations with the white-collar Society of Professional Engineering Employees in Aerospace (SPEEA), which represents more than 20,000 engineers and technical staff in the Puget Sound region, don’t start until September.

Yet as early as February, Goforth began advising SPEEA members to start putting away money for a potential strike in case contract talks fail.

That fighting stance followed an initial meeting with Kight and Boeing Commercial Airplanes Chief Executive Scott Carson.

Goforth and the two other union officials present insist that Carson told them candidly he’d prefer “to get rid of all the unions at Boeing” and intended to continue to support efforts to do so.

Kight, who was also at the meeting, flatly denied that.

“He didn’t say that,” Kight said. “He knows it would be a fool’s errand to make a statement like that.”

Remarks defended

Late last month, Carson himself defended his remarks in the February meeting in a letter to an employee. His version of what he said was: “I wish Boeing didn’t have to work though a third party to have discussions with employees.”

“To say these comments indicate that Boeing is anti-union is, in my opinion, a mischaracterization.”

Yet Goforth sees repeated efforts by Boeing to weaken SPEEA by attempting to oust it as the employee representative at smaller bargaining units in Wichita, Kan., in Utah and in Palmdale, Calif.

“I’m responding to a campaign of aggression against the union. The company is essentially trying to put us out of business,” Goforth said. “If they attack us in one place, they attack us all.”

Kight said the efforts to unseat the union in each place were employee-driven, and the outcomes were determined by employee wishes.

“It’s up to the employees,” Kight said. “We respect the choice.”

Clearly, well-paid white-collar workers do not strike lightly. SPEEA has only had one strike that lasted more than a day, in 2000.

And over the last couple of years, SPEEA appeared weak as factions within the union wrangled bitterly over the leadership of Goforth’s predecessor, Charles Bofferding.

Yet Goforth insists that after his appointment in February, the union quickly moved past the internal conflicts, its focus necessarily sharpened by the upcoming negotiations. He said he’s been surprised to learn just how angry and disaffected the union’s members are.

Goforth cited a survey of his members, the results of which are still coming in. Of the almost 4,000 people who have responded so far — more than a fifth of the total Puget Sound membership, and likely the portion of employees most active in the union — three-quarters registered “low confidence” or “no confidence” in Boeing corporate management.

“This is setting us up for some pretty tough negotiations,” Goforth said. “My fear is that we might find ourselves stumbling into a strike.”

At this point in the 787 program, that could be disastrous for Boeing.

“All of us must continue to keep focused on what we’ve got to do to meet customer commitments,” Kight said. “The last thing we can afford to do is slip up on our promises to customers.”

Dominic Gates: 206-464-2963 or