Boeing engineering union to drop pension demand

SEATTLE: Boeing's engineering union has decided to drop its demand that its labor contract include a pension for new workers, a move that could hasten a deal as the two sides resume bargaining on Wednesday.

The decision comes after one bargaining unit last week narrowly accepted Boeing's contract offer without the pension for new hires. The other unit narrowly rejected the contract, sending them back to the bargaining table.

"The pension is dead," said Tom McCarty, president of the executive board of the Society of Professional Engineering Employees in Aerospace (SPEEA), in an interview with Reuters.

"We're not going to try to breathe new life into it."

The pension became the key flash point in talks between SPEEA and Boeing that began in April. Boeing is now reeling from the grounding of its 787 Dreamliner nearly six weeks ago, a rare event that has halted delivery of the new plane to customers and is costing Boeing an estimated $200 million a month in lost income and potential compensation to airlines.

SPEEA's technicians and Boeing will resume bargaining Wednesday to replace a four-year agreement for 23,000 workers that expired in October. An extension ran out in November, leaving the union free to strike, if members authorize it.

In February, as the crisis with the 787 deepened, SPEEA offered to extend the current contract, which includes 5 percent annual raises, for four more years. Boeing agreed, but insisted on its proposal to eliminate the pension for employees hired or re-hired starting March 1.

SPEEA members already have a 401(k) plan that pays a match up to 6 percent of their annual salary. Boeing's offer would enhance that plan, while cutting out the pension.

The union said this change would reduce the value of a worker's compensation by about 40 percent over the span of a career.

"It's a lot less than the existing pension and 401(k)," union executive director Ray Goforth said in an interview.

Boeing says controlling pension costs is crucial to future investments in new jet designs and products.

"The retirement portion of the offer is incredibly important for the company and that has not changed," as a result of the vote, said Boeing spokesman Doug Alder.

Current employees would keep their pension, and it would grow by 10 percent over the four-year life of the contract, he said.

"We just need to get a grip on future hires so we can get a grip on future investment," Alder added.