Jobs, Pensions, Work Schedules Are Key Issues in Boeing Talks

Bargaining has begun between the International Association of Machinists and Boeing. At issue is the union's demand to bring its members into the Machinists’ National Pension Plan, the company's demand for an alternative work schedule, and the company’s stated plan to eliminate thousands more jobs by outsourcing more production. Health care may also be an issue if the company pushes for co-pays as it did in 1995.

The contract covering 49,300 hourly workers expires September 2.

IAM members voted by 98 percent in July to authorize officials to call a strike vote if bargaining breaks down. Under IAM procedures, a second vote is required to actually call a strike. In 1995, a strike at Boeing stretched out to 69 days when the rank and file rejected an offer recommended by union negotiators.

A confrontation is possible this time as well, especially on the matter of job security. Boeing has not been shy about its recently-stated goal of slashing its salaried and hourly workforce by another 20 percent while the company grows through acquisitions. It’s all part of an on-going effort to become truly “lean,” according to CEO Phil Condit.

This new phase of cost-cutting comes on the heels of Boeing's 1996 acquisition of Rockwell International, its 1997 purchase of McDonnell Douglas, the 1999 sale of its communications division, and the recent layoff of about 4,000 workers. As a result, after a bad year in 1997, Boeing became profitable again last year. Its earnings for the second quarter 1999 alone soared by 172 percent to $701 million.


But Boeing wants to reduce labor costs further by outsourcing and bringing in an alternative work schedule based on four 12-hour shifts operating seven days a week, 24 hours a day. This would allow the company to schedule a weekend crew at straight time.

The union opposes the four-twelve schedule and the seven-day week, but indicates it might go for four-tens.

Perhaps the major issue for most workers is the outsourcing of production. Over half of each Boeing plane is now produced by outside contractors. In 1995, the union won language requiring 90 days notice of outsourcing and the right to submit an alternative bid. This approach hasn’t worked, says the online Machinists’ rank and file newsletter, Floor Mike.

The union says it wants to end outsourcing through language that gives the union “a say” and provides a method for resolving disputes. This may be influenced by a June 21 agreement between the United Auto Workers and Boeing at the former Rockwell facilities. That contract, ratified by 83 percent, brought modest wage, pension, and health care increases along with lump sum payments. But it contained no more than a vague agreement to “review” sourcing and other issues on a quarterly basis. In short, no real progress on job protection.

Much of Boeing’s outsourcing is known as “offloading” or “offsetting,” in which the company agrees to transfer work to countries that buy its planes. Boeing has had several such deals with China and recently one with Poland. Almost half of Boeing’s sales are abroad.

The Floor Mike reports that chief union negotiator Dick Schneider said in June, this issue “belongs in the halls of Congress,” indicating that the union did not plan to bargain over this type of outsourcing. In July, he changed his story, saying the union would raise it, but reiterated that “Congress also needs to offer a solution.”



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Pensions and health care benefits for retirees are also important issues this year. A group of retired Boeing workers called Boeing Retirees on the Line printed up thousands of buttons calling for a Cost of Living Agreement on their pension plan. They point out that in 1996 the average yearly pension for Boeing’s more than 62,000 retirees was only $10,694.

According to Don Grinde of the Unionists for Democratic Change, the current company retirement plan “doesn’t hold a candle to” those of Boeing Teamsters and unionized on-site sub-contractors—or those of IAM officials and reps.

The union wants to bring its members under its multi-employer, union-management-administered National Pension Plan, which now covers 52,000 retirees and 65,000 active members at 1,400 companies. In 1995, the company rejected this idea, but Calhoun now says they will consider it.

This reconsideration may well stem from the $3.7 billion surplus in Boeing’s current pension fund that is a result of the phenomenal rise in stock prices since 1995. While the company would probably have to pay a tax penalty for switching to the union plan, it would be able to hold on to much of this surplus. This would feed Boeing’s strategy of growing through acquisitions.

For the union’s pension plan it would mean a big slice of Boeing’s $33 billion pension fund. The IAM plan was valued at $4.5 billion in 1998.

The big unknown, however, is how future retirees will do as a result of such a switch.


Another union goal is to gain a seat on the Board of Directors for IAM President Tom Buffenbarger, a $36,000 a year job with little real influence.

A 1998 study of union-appointed company directors concluded, “The directors nominated by unions tended to adopt the consensus model of board decision making and to see their role as representing the fiduciary interests of the owners of the firm.” These directors “described themselves as very removed from the rank and file,” it said, and their “overall influence on policy decisions was negligible.”

Keith Thomas, editor of the Floor Mike and a leader of the Machinists’ reform group, Unionists for Democratic Change, has a better idea. He argues that the best way to save jobs isn’t to join management, but to strike it. In addition to possibly winning better language, a strike will force Boeing to recall workers to meet current orders when the walkout ends.

Thomas points out that before the 1995 strike the company was laying people off. But after the 69-day walkout it had to hire just to meet orders. Boeing currently has orders for 620 planes. Nevertheless, Boeing is planning big layoffs for next year. Thomas proposes the slogan “No Contract, No 620.”

The rank and file may just make it happen. At the meetings where the first strike vote was taken, more than 14,000 Machinists showed up in Seattle and 6,000 in Wichita. One Wichita rank and filer told a local paper, “I think if they had a vote to walk out on strike right now, they would vote for it.”