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Boeing Engineers Slow Work on Contract Offer, Union Says

Some Boeing Co. (BA) engineers are slowing work by adhering strictly to rules, a move that may widen if contract talks during a record production boost don’t yield a better offer from the planemaker, a union leader said.

The moves, carried out by “dozens of employees” in clusters along production lines, aren’t organized by the Society of Professional Engineering Employees in Aerospace, said Ray Goforth, its executive director. The number of participants may grow into the hundreds, he said.

Speea’s existing contract covering 23,000 engineers and technical employees, largely in the Seattle area, expires Oct. 6. If Boeing refuses to engage in “substantive” dialogue after the parties return to the bargaining table, Goforth said the union may organize mass “work-to-rule” campaigns in which members complete required tasks and nothing more.

Boeing hasn’t received any reports of slowdowns or work-to- rule activities, Doug Alder, a spokesman, said. A labor action by engineers, who work alongside machinists and must sign off on assembly throughout a jet’s production, would hurt Boeing’s efforts to boost output 60 percent over four years, work through a 787 backlog and develop new variants like the 737 Max.

Goforth said ballots on the Sept. 13 contract proposal are being sent to members this week and the union has recommended voting it down. The election ends Oct. 1. Union leaders have already unanimously recommended rejecting the offer, citing proposed wages that stagnate or even lose purchasing power.

‘Heavy-Handed Rhetoric’

“There’s always a little bit of heavy-handed rhetoric that goes around with these discussions,” said Peter Arment, an analyst at Sterne, Agee & Leach Inc. in New York who rates Boeing shares a buy. “It’s just part of the process that’ll eventually get everyone back to the table and hammering out an agreement.”

About 1,500 union members rallied against the proposed contract during a break today at Boeing’s Everett, Washington, factory, where aircraft such as 777s, 767s and 787s are built, Goforth said. Members chanted and held signs opposing the offer for about 30 minutes as company security officers looked on, he said, adding that work was not disrupted. Alder, the Boeing spokesman, declined to comment on the rally.

The union discontent mirrors similar sentiment a year ago at Boeing vendor Spirit AeroSystems Holdings Inc. (SPR), where some of 3,100 unionized programmers, technicians and engineers started work slowdowns over a stalemate in contract talks. Spirit, a maker of jet fuselages and parts for Boeing and Airbus SAS (EAD), at that time was raising production of fuselages for the 737 at Boeing’s behest, along with increasing output on other models.

“Like a lot of these deals, sometimes they go to the 11th hour,” Arment said. “When you put an offer on the table, it isn’t always your last offer.”

Proposed Raises

In Boeing’s offer, the salary adjustment fund from which engineers are awarded raises would rise by 3.5 percent annually for the next four years. For technical workers, the increase would be 3 percent the first year and 2.5 percent after that.

Goforth said those raises don’t sufficiently keep up with inflation in the Seattle area. The Consumer Price Index for the Seattle area rose 2.7 percent during the past 12 months.

Employees’ contributions to health-care coverage would more than double during the contract to $4,100 a year in 2016 from $2,000 this year, Chicago-based Boeing said in online summaries of the proposals.

Boeing fell 0.8 percent to $69.90 at the close in New York. The shares have declined 4.7 percent this year.

The company said yesterday in a statement that the union’s decision to put the proposal directly to a member vote is an “unprecedented departure from the normal negotiating process.” The action removed “the opportunity to come to a mutual understanding about our proposal,” Boeing said.

The last contract, in 2008, provided annual raises of about 5 percent and higher pension payments and overtime rates, while union members paid about $200 a year more for improved health- care benefits.

To contact the reporter on this story: Victoria Stilwell in New York at vstilwell1@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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