If Machinists Union members next week ratify an 8-year contract proposed by Boeing in consultation with the union, that approval could mark the end of conventional union contracts that have made Boeing jobs a cut above the rest.
If the contract is rejected, that event could mark the beginning of a further exodus of Boeing jobs from a region where the company has its roots.
Boeing says that contract approval is necessary for it to assemble its newest airliner, the 777X, at its Everett plant and to construct the plane’s high tech composite wings in the Puget Sound region. The unsaid but widely acknowledged consequence of a contract rejection would be Boeing’s throwing open the big jobs bonanza to other states.
Specifics of the labor proposal were rolled out Wednesday, a week before the 31,000 union members are scheduled to vote whether to approve the deal.
Here’s what makes the contract so different from the pacts that have ruled the relationship between Boeing and its blue collar workers for decades.
• The proposal is for eight years, twice as long as the typical union-company agreement. The agreement would take effect in 2016. With two more years remaining under the present contract, union workers would have 10 years without an opportunity to renegotiate their wages and working conditions. For Boeing, that relatively long contract would mean labor peace on the Puget Sound assembly lines for a decade and predictable costs on airplane orders that extend years into the future.
• The deal, in exchange for a $10,000 upfront payment to every covered machinist, would provide minimal general wage increases over the next few years. Over the eight-year term of the agreement, general wages would rise by a total of just 4 percent.
That compares with general wage increases totaling 23 percent in the present contract and its predecessor. The present contract and its extension cover eight years.
• The pact would alter the progression of workers up the steps of the pay scale. The present contract provides for 12 step increases, a 50 cent-an-hour boost every six months for six years. Under the present system, a worker on the 11th step in the lowest pay grade would be making about $18 an hour after 51/2 years. The 12th step would elevate his or her pay to the maximum in that grade, more than $31 an hour, according to union officials. The new program provides an infinite number of steps, meaning that reaching the maximum pay in the job category could take 20 years or longer if the pay scale were periodically adjusted. From Boeing’s standpoint, that change would cut costs and eliminate the huge raises workers now receive on reaching their sixth year with company.
• The new labor agreement would mean an end to the defined benefit pension plan at the company except for current employees covered by that plan. Those defined benefits for them would be frozen and their further retirement accruals would be in defined contribution 401(k)-style plans to which the company would contribute fixed amounts of money. Most other Boeing employees have already converted to defined contribution plans as have many other companies that want to eliminate the risks they’ve encountered in traditional defined benefit plans.
For workers, the end of the defined benefit plans would mean they would have to craft an investment strategy to deliver retirement income. If those investments did poorly or if they lived longer than anticipated they could find their retirement income drying up, a risk that the company assumes under the present system.
For older Boeing workers now close to retirement, the company has created an incentive to vote for the new contract. That new deal would allow them to retire at 58 without a diminishment of their pension benefits and would bolster the formula for calculating retirement benefits. The present contract calls for retiring workers to earn $91 per month in benefits for every year of service if they retired at the present contract’s end.
The new deal would increase that amount to $95 a month. For a worker with 35 years of service that would mean a $140-per-month increase in benefits.
• Health care costs would be shifted toward workers by increasing workers’ share of the costs of providing that health care benefits through greater paycheck deductions, and higher co-pays and deductibles. Boeing’s health care plans typically have been richer than other companies’, a fact that will be altered as the company moves costs to workers over the contract term.John Gillie: 253-597-8663 john.gillie@ thenewstribune.com