Boeing Offers Engineers’ Larger Raises in Contract Talks

Boeing Co. (BA) offered its engineers larger raises in a revised labor contract that attempts to prevent a strike during record production increases for the planemaker’s commercial airliners.

Under the new proposal, engineers would be eligible for annual raises of 4 percent to 5 percent over the life of the contract, with technical workers eligible for 4 percent and lump-sum payments.

“We believe this offer is market-leading by every definition,” Mike Delaney, vice president of engineering, said on a conference call with reporters. “We want to get to an agreement, but getting to a bad agreement isn’t good for the company either.”

Keeping the engineers on the job is vital for Boeing, since they work alongside machinists and are required to sign off on assembly throughout a jet’s production. A strike would crimp Boeing’s efforts to boost output 60 percent over the four years through 2014, work through delays on the 787 Dreamliner and develop new variants such as the 737 Max.

In November, the planemaker offered raises of between 3 percent and 4.5 percent a year over a four-year contract, compared with the first offer of 2.5 percent to 3.5 percent a year. The last accord with the Society of Professional Engineering Employees in Aerospace, or Speea, provided 5 percent a year, and the union had asked to either extend that or lift it to 7.5 percent this time.

Under the new proposal, engineers would receive an average of $85,600 in additional pay and incentive compensation over the four-year contract, while technical employees would get $62,100 more on average, Doug Alder, a Boeing spokesman, said today.

Smaller Cuts

Speea negotiators, who haven’t seen the entire offer, said its wage cuts were smaller than before, Bill Dugovich, a union spokesman said in an e-mail. The union remained concerned that Boeing still wanted to increase medical costs and eliminate a pension for future hires.

“It was profoundly disappointing that Boeing corporate yet again gave us mere pieces of an offer and refused to provide it electronically” Ryan Rule, a member of Speea’s executive board, said in the statement. “As members may recall, we found numerous take-a ways in the last company offer which they hadn’t bothered to flag as changes.”

The 23,000 engineers and technical workers represented by Speea, largely in the Seattle area where Boeing’s commercial headquarters are located, have been working without a contract since Nov. 25. Talks resumed on Jan. 9.

Speea Strikes

Speea’s 15,000 engineers account for about 9 percent of Boeing’s 175,000 employees worldwide and make an average of $110,000 a year. The 8,000 technical workers covered by the same contract earn an average $79,000.

Speea has only gone on strike at Boeing twice since it was founded in 1946: for one day in 1993 and 40 days in 2000. The Machinists, who have walked out a total of seven times since 1935, earn an average $56,000 a year.

Three years after a two-month strike by Machinists in 2008 delayed dozens of deliveries, Boeing reached a surprise agreement with the group nine months before the expiration of an existing contract.

Just one year later, amid contentious talks with Speea, Boeing said negotiations had reached a “critical point” and asked the Federal Mediation and Conciliation Service to help resolve differences.

Delaney said Boeing has prepared for the possibility of a strike.

“We have contingency plans for anything, and we have contingency plans here,” he said on the call.

To contact the reporter on this story: Tim Catts in New York at tcatts1@bloomberg.net

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

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