IAM and Boeing reach surprise tentative agreement

IAM District 751  on November 30 announced that it had reached a tentative agreement with Boeing on a new contract. Members will begin voting on the agreement next week. The agreement, which came as a surprise, includes what the IAM negotiating team calls “an unprecedented commitment” to job security by the company for workers in the Puget Sound area of the State of Washington and Portland, Oregon.

The negotiating team also said that the pact will require members to pay higher out-of-pocket health care expenses, but it preserves the defined benefits pension plan for current workers and new hires, increases pension payments, and protects medical benefits for retirees.

Negotiations on the new contract began in October when Boeing officials contacted union leaders and asked them to talk about issues that were going to come up when negotiations for a new contract begin in 2012. During the talks, the company asked if the union would be willing to extend the current contract with some important changes.

After the initial talks, the union agreed to discuss a contract extension, and the talks proceeded in secret. The union negotiating team explained that the secret talks were necessary because “in the past, we’ve gone through negotiations with media, politicians, and bloggers second-guessing our moves and trying to determine the outcome while we work against a looming deadline. To make a big public splash this time would have undermined what we were doing and would have gone against the reasons why we agreed to meet with the company in the first place.”

As a result of the new agreement, which if ratified will expire in 2016, Boeing agrees that all of the work on its new 737 MAX airliner will be done in the Puget Sound area and Portland. The 737 MAX is the latest version of the 737, which has become the airline industry’s most widely used single-aisle passenger jet. Boeing currently has commitments from airlines to purchase more than 700 new 737 MAXes, which will come into service in 2017.

Work on other Boeing airplanes currently performed by union labor in the Puget Sound and Portland will continue, and new work may be transferred to the plants.

When the plants that build the 737 MAX are fully staffed, there will be about 20,000 workers employed building the jet, which the IAM estimates will pump $5.5 billion of related economic activity into the communities near the plants.

The airplane itself will be built at Boeing’s Renton, Washington plant. Boeing plants in Portland, Oregon and in the Puget Sound that build parts for the current 737 will build parts for the 737 MAX. Boeing also agreed to phase out outsourced work done by contractors that inspect supplier parts.

For the most part, the union avoided making concessions, but it did agree to higher out-of-pocket health care expenses for members. Union members will still have access to a number of health care options, but in general their deductibles will increase as will their monthly premium payment. If a generic drug is available, workers will pay the difference between the cost of a generic and non-generic drug.

The company agreed to increase monthly pension payments. Starting in 2013, the formula for calculating pensions increases from $83 times years of service, to $85 and continues to increase by $2 a year until 2016. In the past, Boeing tried to exclude new hires from the defined benefits plan, which pays a guaranteed monthly amount for the life of a retiree. The new agreement keeps new hires in the defined benefits plan.

Workers also will get a 2 percent pay raise each year of the contract, quarterly cost-of-living adjustments will continue at the same rate, workers will be eligible for incentive payments that could raise pay by as much as 2 percent to 4 percent of yearly gross earnings, and they will receive a $5,000 signing bonus.

Boeing’s and IAM’s relationship has often been contentious. A two-month strike in 2008 created widespread industrial disruption. The union alleges that the strike led Boeing to relocate some work on its 787 Dreamliner to a non-union plant in South Carolina.

The union subsequently filed a complaint with the National Labor Relations Board charging that the move was made by Boeing to retaliate against the union for the strike. The NLRB heard testimony on the charge this summer. After the tentative agreement was reached, the union said that it would ask the NLRB to drop the charges.

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