Engineers union joins Machinists in outsource fight

Engineers at Boeing on Wednesday became the second union to demand the return of work farmed out to contractors, a key issue that contributed to the strike by 27,000 Machinists.

The Society of Professional Engineering Employees in Aerospace (SPEEA), representing 21,000 Boeing workers in Washington, Oregon, California and Utah, presented its first proposal to company executives for a three-year contract to replace the one that expires Dec. 1, Executive Director Ray Goforth said.

The engineers may increase pressure on Boeing to take back work it gave suppliers to help control costs while developing and building planes like the new 787 Dreamliner.

The Machinists strike has shut down production at Boeing's Seattle-area manufacturing hub, where an increasing amount of the work is now the final assembly of parts built elsewhere by contractors.

"The fact the engineers are bringing up similar demands reinforces that this is a big issue for Boeing employees and strengthens the Machinists' position," said Harley Shaiken, a labor-relations professor at the University of California, Berkeley. "We have a test of economic wills that could go on for quite some time."

SPEEA is seeking raises, more vacation days, higher overtime rates, a restoration of early-retiree medical benefits and changes to the health-care plan and pension, Goforth said in an interview. It's also "proposing limits to Boeing's use of contract labor," he said.

Goforth said work including parts of the engineering and design on the new 747-8 and 787 models has been awarded to companies such as India's Tata Consultancy Services.

The proposal was presented to Boeing human-resources executives in Utah to show SPEEA's opposition to Boeing's plan for separate negotiations with engineers there, who work on the company's missile program, Goforth said.

Boeing says it will need time to review the engineers' demands. "That could take a week or more and then we'll provide a response," spokeswoman Karen Fincutter said in Seattle.

The engineers haven't walked out as often as members of the International Association of Machinists.

The Machinists have stopped work over three of the last six contracts before this one, lasting from four to 10 weeks. SPEEA has gone on strike only twice: for one day in 1993 and for 40 days in 2000.

Engineers are watching the Machinists picket and preparing for similar negotiations, Goforth said.

"The Boeing Company's approach to the Machinists is setting a pattern," Goforth said. "Boeing could be facing back-to-back strikes."

Machinists walked out when Boeing spurned changes the union sought about the use of outside vendors. Boeing's offer of an 11 percent raise over three years also fell short of the 13 percent the IAM wanted, along with other measures. No new talks have been scheduled.

Workers are using Boeing's record order backlog and profits in an effort to gain a bigger share of the work and higher compensation. The company's financial success means "there is no excuse whatsoever" for Boeing to try to make any changes that would take benefits away from workers, Goforth said in a letter to SPEEA members Wednesday.

"The whole underlying issue of job security is proving to be pivotal to what's taking place at the bargaining table, and it reflects the success that Boeing is having," Shaiken said. "Both the Machinists and the engineers want to see that continue, but they want a successful Boeing to mean more jobs, not a smaller manufacturing presence."

Boeing CFO sees more delays for 787

Boeing expects the Machinists strike to last at least a month and further push back the 787 Dreamliner, Chief Financial Officer James Bell said Wednesday.

"I think there'll be at least a one-month delay," Bell said at a Morgan Stanley conference Webcast from Dana Point, Calif. "Right now it's a one-for-one day slip on the 787 and all other programs as well."

The strike jeopardizes Boeing's plan to test-fly the 787 in November and to start shipments in next year's third quarter. The program already is at least 14 months behind schedule because of parts shortages and supplier problems.

"We'll never get to a complete impasse; I think we'll work through it," Bell said, while noting there are "still significant issues" between Boeing and the Machinists union. The dispute over the use of outside contractors to perform work Machinists have traditionally done "is not the only issue we're apart on."

Even if the company were to reach agreement with the union in 30 days, timing that Bell said he would be "pleased with," the strike would have a larger impact on Boeing's earnings than the last one in 2005 because production and profit margins are both higher, he said.

The 28-day walkout that year shaved $300 million off second-half profit.

Bloomberg News

Triumph plant faces

layoffs due to strike

More than 200 workers at the Triumph Composite Systems plant in Spokane are expected to be laid off next week because of the Boeing strike.

Triumph plans to start layoffs Sept. 19, said Michael Schelstrate, human-services director at the plant.

"They [Boeing] are our primary customer," Schelstrate said. "We're seeing an immediate and significant impact from the strike."

The first group of layoffs is expected to affect 40 to 45 percent of the plant's 550 workers, he said.

An additional to 20 percent would face layoffs if the strike continued beyond Sept. 21, he added.

Triumph purchased the Spokane plant from Boeing in February 2003. The plant produces ducts and floor panels for Boeing and Airbus aircraft.

Boeing accounts for about 21 percent of Triumph's sales.

The Spokesman-Review