Boeing Offer May End Costly Strike
A Boeing contract offer on Friday appeared to have settled the bitter 38-day strike by thousands of engineers and technical workers, but the largest white-collar walkout in U.S. history could still have some lasting consequences for the aerospace giant.
More than 50% of the commercial-airplane deliveries are behind schedule and development progress on some military aircraft programs has been slowed. Perhaps most important, employee morale will determine whether Boeing can catch up in the short term and maintain its leadership in the long term.
Even though industry analysts and Boeing executives believe the company will meet its original target to deliver 491 commercial jetliners by the end of the year, less clear is how the engineers and senior management will deal with the mistrust that had been building even before the walkout began.
For many Boeing engineers, who generally are regarded as some of the best and brightest in the aerospace industry, the high esteem that had come with the job has been eroding for some time. The strike served to underscore that decline.
Even before the unprecedented walkout, engineers had been leaving Boeing for more lucrative jobs at Microsoft Corp. and other high-tech firms. The tentative end of the strike fails to address these deeper questions about morale and continued defections from the company’s storied engineering brain trust.
“What has changed now is that we have lost our innocence,” said Jim Mathis, a senior specialist engineer and 23-year Boeing employee. “People went out on strike for the respect we felt we deserved. What we design is the future of the Boeing Co. We may have less impact on the short-term financial impact of the company, but we hold the key to Boeing’s future survival.”
For now, the senior leaders of Boeing and the Society of Professional Engineering Employees in Aerospace, say the company’s tentative three-year pact, represents a good first step to restoring some of the respect and trust of the 15,000 to 17,000 SPEEA members who went on strike.
The union said the deal includes guaranteed wage increases of at least 9% over the life of the contract as well as cash bonuses of up to $2,500--a crucial issue in a strike that had grown increasingly divisive since it began Feb. 9.
Boeing dropped its demand for employee co-payments toward health insurance premiums, the union said, and agreed to extend health coverage to unmarried workers’ domestic partners.
“We wanted respect for our contributions and a better future for our families and our company,” said Charles Bofferding, executive director of SPEEA. The tentative agreement, he said, “delivers on those demands.”
Members will vote on the tentative agreement Sunday. Union officials said the picket lines will remain manned until the contract is ratified.
For his part, Boeing Chairman Phil Condit, himself an engineer and former SPEEA member, offered an olive branch to the engineers and technical workers. He said he hopes ratification of the contract will be the start of a new beginning.
“Many employees said they were seeking respect,” Condit said. “I believe we now have a better understanding of what is meant by that term.”
Condit said he will be the co-chairman of new “working together” joint task force that will try to address the morale and quality concerns raised by the engineering and technical staffs. Paul Almeida, president of the International Federation of Professional and Technical Engineers, will serve as the union’s co-chairman. The council will meet quarterly.
SPEEA members say they are willing to meet the company halfway as long as senior management is willing to develop a true partnership with them.
“We’re prepared to commit to this and hope for the best, but there is a lot of skepticism among members about the commitment of management to partner with SPEEA,” said Stan Sorscher, chairman of the SPEEA negotiating team, a physicist and Boeing researcher. “If we can do something to build trust and establish a common interest, then that could be the spark to improve relations.”
The union represents about 22,350 Boeing employees who are mostly based in Washington state, but there also are members in Kansas, California, Florida, Texas, Oregon and Utah. About 14,000 are dues-paying members.
This was the first large strike in SPEEA’s 56-year history. Many members and industry observers had questioned whether the white-collar workers would take on the company. The union’s only previous strike was a one-day walkout in 1992.
But the increasingly bitter strike drew national attention for its solidarity. Last week, the nation’s most powerful union organization, the AFL-CIO, pledged financial support for the striking engineers.
Negotiations broke down Feb. 27 despite the efforts of a federal mediator. Earlier this month, Boeing declared an impasse, which SPEEA disputed. Boeing’s market value has fallen by about $5.3 billion since the walkout began and striking workers lost more than $125 million in wages, the company said.
The impasse was broken in Washington, D.C., over the past two days in talks that were mediated by C. Richard Barnes, director of the federal Mediation Service. This latest round of negotiations included for the first time AFL-CIO Secretary-Treasurer Richard Trumka and James Dagnon, Boeing’s senior vice president for personnel.
News of the tentative agreement sent Boeing shares up. Boeing’s stock closed Friday at $38, up $2.38 or 6.7%, in New York Stock Exchange trading.
Analysts say Boeing’s first- and second-quarter earnings could suffer, but that it should be able to meet profit projections for the full year.
“They’ll have everything delivered that they planned to deliver by year-end,” said Paul Nisbet, aerospace analyst for JSA Research. “It’s just a redistribution by quarter.”
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Back to Work
Boeing and the union representing its professional and technical workers reached a tentative agreement to end the strike that began Feb. 9. The strike affected Boeing’s ability to deliver jetliners on time and hurt the company’s stock price.
Weekly closes since Jan. 1:
Friday: $38, up $2.38
* There were 15,000 to 17,000 striking employees.
* The company missed 15 of 42 planned aircraft deliveries in February.
* There have been three deliveries in March, compared with an expected delivery rate of more than one jetliner a day for a projected total of 491 in 2000.
* Boeing stock jumped 6.7% Friday but remains off its Jan. 19 year-to-date high of $47.63.
* Analysts expect first- and second-quarter earnings to be lower than pre-strike estimates but predicted the company will boost production and satisfy year-end financial targets.
Sources: Bloomberg News; Boeing Co.; Times files
Researched by NONA YATES/Los Angeles Times