Both Sides Differ On Health Care, Benefits

Boeing and the International Association of Machinists and Aerospace Workers (IAM) began negotiations Friday towards a new labor contract for more than 26,000 employees, largely in the Seattle area, Portland, OR and Wichita, KS.

"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. "Working with the union, we've agreed to start discussions much earlier than usual. This will allow us to spend more time listening, understanding each other's positions, and resolving issues early."

While the two sides reached agreement on that point, it doesn't mean they're on the same page on other issues. The Seattle Times reports Boeing plans to ask the union to consider a radical shift to its benefits plan for new hires -- replacing the defined plan with one similar to a 401(k), with Boeing contributing a lump sum based on the worker's wages.

The union wants to keep the current plan, which transfers control to the worker after five years. Boeing wants the so-called "enhanced" plan to appeal to a new generation of workers that may not want to stay with Boeing for that full term, but wish to transfer their earnings to a new employer. The planemaker also wants new hires to start out at a higher salary -- but not a raise for top-level IAM workers, whose earnings Boeing says are already inline with current market rates.

Kight told the Times Boeing also wants the Machinists to accept a slight increase in what they pay for health care coverage, to offset the seven percent annual increase in those costs the company is now paying. The planemaker also wants annual physicals and screenings -- a level of oversight the union is uncomfortable with.

Tom Wroblewski, president of Machinists Union Local 751 in Seattle, said Friday the union has already threatened to strike over the proposed pension changes... and they're not thrilled with Boeing's other suggestions, either. 

"They're posturing to take away benefits that we've fought hard for," he said. "That strategy is as flawed as their 787 production system."

Currently, IAM-represented employees earn an average base wage of nearly $27 per hour, according to Boeing -- nearly $56,000 annually before overtime. In addition, they 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.

Kight expressed optimism Friday that despite contentious undertones to the negotiations, that both sides could reach an amicable agreement without a lot of posturing. "We intend to move away from focusing on last-minute bargaining and instead conduct these negotiations in an open and transparent manner," he added. "That way, employees -- and their family members -- can fully understand the issues and the value of the contract when they vote on the company's offer in September."

FMI: Boeing's Negotiations Page, IAM's Negotiations Page