Boeing Contract Offers Pay Raise, Job Protections
Wednesday, October 29, 2008
Boeing machinists waged a nearly eight-week walkout that resulted in a contract that boosts pay and adds protections for factory jobs, even as the economy slumps.
But some industry analysts said that the agreement announced Monday may also embolden the aerospace giant to look beyond the company's heavily unionized Pacific Northwest manufacturing base when considering operations in the future.
"I would say the union probably won the battle and Boeing probably wins the war over the long term," said Peter Arment, the aviation analyst at American Technology Research. "If you are going to establish a new assembly facility, you may look at more competitive states."
Under the tentative pact, the International Association of Machinists and Aerospace Workers won added provisions that block cutbacks in health-care benefits, boost pension payments and expand job protections for workers threatened by subcontracting. The union said the agreement would mean a 15 percent pay raise over the four-year contract, plus bonuses that total at least $8,000.
Boeing, however, gets to keep subcontracting provisions won in past contract struggles. The company also gets four years of labor peace as it tries to maneuver through the deteriorating economic environment.
Union leaders said a vote on the deal by 27,000 workers is scheduled for Saturday. Analysts are predicting approval.
Boeing spokesman Tim Healy said the company views the agreement as a deal it can live with. "It gives the IAM the assurance they needed in terms of job security, but it gives us the flexibility we need to run the company," he said.
Machinists were able to win job-security protections for forklift drivers, delivery workers and inventory positions. These jobs are often highly coveted in factories. They are earned through seniority and viewed as a soft landing after years of physically demanding work on the assembly floor.
Gary N. Chaison, professor of industrial relations at Clark University in Worcester, Mass., said the deal is one that would be envied by workers in other unionized industries.
"In the context of steel and auto workers, it's a big achievement," Chaison said. "In the context of a clothing or grocery worker, it would be beyond their wildest hopes."
In the settlement, Boeing guaranteed 2,900 jobs in various categories of inventory management and delivery. The company guaranteed that the workers wouldn't be laid off because of outsourcing moves or other changes designed to increase productivity. Boeing agreed to retrain workers whose positions are eliminated.
The union said it also won language to expand its ability to review Boeing's subcontracting decisions and to compete for work that moves between Boeing facilities.
The strike has added to the bad blood that has developed between Boeing and the union. In the strike-affected third quarter, profits at Boeing's commercial airplane division slipped 58 percent. The strike was the third-longest in Boeing history, according to the company. In 2005, the IAM hit Boeing with a 28-day walkout. In 2002, the union rejected a contract but a strike vote failed the necessary test of a two-thirds membership approval.
For years, IAM has voiced worry about the direction of Boeing's production strategy. On its latest plane -- the 787 Dreamliner -- Boeing farmed out large sections of the planes to contractors, leaving only the role of final assembly to machinists. Machinists had larger roles in past production programs, on planes such as the 777 and 737.
Richard Aboulafia, an industry analyst, said Boeing workers should savor the generosity of the contract because future terms might not be so sweet once the agreement runs it course.
"After that -- they'd better save for the future," he said. "These are the last jobs of their kind. Good salary, good pension and good benefits and no university degree required."