Another battle at Boeing?

August 27, 2008

Darrin Hoop looks at the contract battle facing IAM members at the aircraft giant Boeing.

THE LATEST contract battle between Boeing Co., the world's second-largest maker of commercial airplanes, and the 27,500 members of the International Association of Machinists and Aerospace Workers (IAM) will come to a head when the current three-year deal expires at midnight on September 3.

At stake is whether one of the world's most powerful corporations, which has made more than $8.5 billion in profits since the current contract was ratified in September 2005, can shove a concessionary contract down the throats of a key manufacturing union.

Though the talks began on May 9, the two sides are still far apart. Despite not receiving a general wage increase (GWI) since 2004, Boeing is proposing a paltry pay raise of 2.5 percent the first year and 2 percent in each of the following two years of the 3-year deal, while retaining the meager current cost of living adjustment (COLA) formula which it estimates will add a further 3 percent pay hike over the life of the contract.

But as Don Grinde, a 31-year member of IAM District 751 and a crane operator at Boeing's Everett, Wash., plant, points out on his contract blog site, inflation is up 12 percent this year. The union would need a $3.60 COLA increase just to keep up with price increases this year alone. For its part, the union is demanding wage gains of 9 percent to 13 percent over three years.

Some 2,000 Boeing workers and their supporters rallied in the pouring rain for a decent contract
Some 2,000 Boeing workers and their supporters rallied in the pouring rain for a decent contract (Lonnie Lopez | SW)

Another key pay issue is Boeing's proposal to only raise the lowest entry-level pay grade by $1.28. It is currently $9.72 an hour and has been unchanged since 1992.

Boeing is also dangling a single lump-sum payment after contract ratification of $2,500 and a new incentive plan that will pay out up to 20 days extra pay annually, depending on performance as measured by company profits, quality of work and days lost due to injury--all of which is up to management's discretion.

The company is also offering a pension increase to $75 a month for each year of credited service, a 7.1 percent increase from the current $70 figure.

But this pales in comparison to the 16.7 percent pension increase the IAM received in the current contract. Machinists receive around $2,250 a month in pensions, but that is still half ($4,500) of what Boeing truck drivers, members of Teamsters Local 174, earn monthly. As Grinde puts it on his blog, to boost pensions a mere 20 percent--to $84--would cost Boeing just 50 cents an hour per worker.

On health care, Boeing is proposing a 100 percent increase in out-of-pocket costs--but in some cases, such costs would rise 300 percent. They're also demanding takeaway contract language in the area of prescription drug coverage, opening the way for further cost increases.

IN ADDITION, the IAM outlined four main strike issues in Boeing's original offer. So far, Boeing has only taken one of them--forcing 1,800 Boeing workers in Wichita, Kan., to a separate bargaining unit from the rest of the IAM members--off the table. The other three strike issues are ending both pensions and early retiree medical care for future hires and the outsourcing of facilities maintenance work.

Defending union jobs is a key issue. Although the number of machinists has increased by 9,000 over the last three years as Boeing has sold more than 1,000 planes yearly, the IAM has still suffered a loss in jobs in the company's commercial airplane division from around 50,000 in 1989 to about 27,500 today. Speedups alone cut the number of production workers per plane from 153 in 1990 to just 52 in 2002.

But now, the IAM has the leverage to regain jobs, as the company has a record order backlog that will keep it busy building planes for the next eight years. Though the IAM's current proposal is vague on the details, the August 23 contract update on the union's Web site has raised machinists' expectations by demanding a substantial increase in pensions, adding improvements in health care, and improving job security.

The anger level is high, as evidenced by the 15,000 workers--out of 25,000 in the Puget Sound area--who showed up to Key Arena in Seattle on July 16 to vote by a 99 percent margin to authorize a strike. Then, some 2,000 workers, their families and supporters rallied in the pouring rain on August 24 outside the Doubletree Hotel where negotiations are taking place.

In attendance were unionists from Boeing's engineering workers' union, the Society of Professional Engineering Employees in Aerospace (SPEEA); Operating Engineers; Teamsters; American Federation of State, County and Municipal Employees and others. But like in 2005, if Boeing doesn't make substantial movement in the next week, a strike will be necessary to try and win the union's demands.

In 2005, the machinists shut Boeing down for 28 days. The strike cost Boeing about $300 million. While the strike could have won more gains and contained fewer concessions, it did stop some of Boeing's worst concessionary demands. This time there's no excuse for concessions. Boeing is flush with $10.2 billion in cash and marketable securities as of June 30. Solidarity will be key.

At the rally, an official from SPEEA summed up well what it will take to win: "IAM and SPEEA are working together as never before. Boeing made record profits, but wants takeaways from the employees who produced those profits...Boeing needs to share its success with the best workers in the world. SPEEA is here with you. Together we will win!"

Steve Leigh contributed to this article.

Further Reading

From the archives