***This message is being sent from Ray Conner, Commercial Airplanes vice president of Supply Chain Management and Operations, and Doug Kight, Commercial Airplanes vice president of Human Resources, to all Commercial Airplanes managers and HR employees.***

Why our discussions with the IAM were unsuccessful

You have undoubtedly heard the many reactions and opinions of people weighing in on our decision to expand our 787 production capacity to Boeing Charleston. Not everything you read or hear is accurate, and that’s why we feel it’s important to share information to help your teams sort through the many perspectives.

We’d like to emphasize that Boeing considered many complex factors in this decision. Working with the union to achieve our objectives of production stability and long-term cost competitiveness was one of those factors.

We personally participated in the dialogue with the International Association of Machinists, starting in the summer. We held talks over many weeks with both IAM international and local representatives. The talks were constructive and all participants were engaged in a good-faith effort to address the issues. During these discussions we very clearly laid out our objectives and our need to have the union’s best offer for an agreement by mid-October to enable us to prepare a recommendation for the Oct. 26 meeting of Boeing’s board of directors. The IAM gave us that final proposal on Wed., Oct. 21.

Unfortunately, that offer fell short of what would have been needed for Boeing management to recommend to the board that the second 787 line be put in Everett, Wash. The union:

• Offered to extend the current contract eight years to 2020.
• Included annual general wage increases of 3 percent on top of an annual cost-of-living adjustment that has added more than 1 percent a year for the last 20 years.
• Required three lump-sum bonuses of $5,000 or 10 percent of earnings, whichever is greater, in 2009, 2013 and 2016.
• Included an annual pension increase of $2.50 per month for the life of the agreement, taking the pension to $103.50 by 2020.
• Demanded that Boeing promise to be neutral on all IAM organizing and decertification campaigns anywhere in the country.
• Required that Boeing guarantee to put future airplane programs in the Puget Sound region far into the future.
• Agreed to share medical cost increases, but deferred that sharing until 2018.

We told the IAM that we wouldn’t be able to make commitments on future airplanes so far into the future. And we couldn’t agree to blanket neutrality on international IAM campaigns that had nothing to do with our Puget Sound work force. Both issues were identified early as roadblocks to moving forward.

We stated that we needed an extension of at least 10 years to the current contract. We offered annual wage increases of 2 percent, a bit higher than the average increase that our IAM-represented employees have gained over the last 30 years. We offered annual pension increases at the same rate. We offered to introduce an annual incentive plan that could have boosted income annually for our employees.

In the end, we told the IAM clearly and repeatedly that their offer did not meet the objectives we had set out for a proposal to the board of directors. We asked them if they were sure that this was the best they could do on a range of issues, and they said it was. We gave them an ample, fair opportunity for discussion throughout this process, and the union was unwavering in its positions on key issues. That’s why we declined to participate in their request for 11th-hour talks.

On the positive side, we shared a lot of information with the union about the intense global competition we face, our business environment and our business issues. The union agreed to a framework on sharing future medical cost increases. We developed an approach to an incentive pay plan that would reward employees for achieving annual targets in the areas of cost, quality and productivity. We had good, constructive dialogue on a range of important issues, and we hope to build from there in regular meetings with union leadership. We remain committed to improving our relationship with the IAM.

When all is said and done, we believe that we are in the midst of one of the most exciting, dynamic times for commercial aviation. And the Puget Sound region is the hub for aerospace talent. We solve incredibly challenging technical problems every day and we work together to get the job done. Puget Sound and Charleston combined are a great engine for growth and a successful future for us all.

Message from District President Tom Wroblewski to 751 Members in Response to Doug Kight’s 10/29/09 Memo

October 29, 2009 – “I’d like to respond to Doug Kight’s e-mail to managers explaining what he says were the stumbling blocks that kept us from reaching an agreement to keep the second 787 line in Everett. It’s misleading, it’s disappointing and it’s not truthful.

Boeing would not commit to any agreement to keep the second line in Everett. That, and only that, is the reason why our conversations went nowhere.

The proposals Boeing e-mailed today were more detailed than anything we heard from the Company during three weeks of face-to-face conversations. They threw a lot of numbers around while we were talking together, but they were never willing to put them in writing. If they’d been this willing to put numbers in writing a week ago, we might have got somewhere.

We presented them with an initial verbal proposal. They never responded to that first proposal in writing, and never told us what they wanted to see in an agreement — and absolutely never told us there was a deadline for submitting revised offers. Instead, we found out the hard way that they’d set an arbitrary deadline; when it passed, they just walked away. They’ve set a lot of unrealistic deadlines with the 787. This was just one more.

The discussions we had with them were like trying to build a foundation for an agreement on the shifting sands of the desert. As soon as we got close to an agreement in one area, the Company would change the subject. We never exchanged formal written proposals– and we never got a guarantee for the second line.

Aside from being misleading, the tone of this e-mail was disappointing too. I see no value in going back and rehashing this. It serves no purpose. They got what they wanted from South Carolina. It’s time to move on.

This latest Company e-mail is just another smoke-and-mirror tactic trying to confuse the situation. Boeing executives had made their decision long before they ever sat down to talk with us. They’re breaking ground in Charleston in two weeks and planning deliveries for 2012, both clear signs this was their plan all along.

The simple truth is there won’t be any new jobs in South Carolina if our Members here in Puget Sound can’t find solutions for all the 787’s problems. We’re the ones who will fix the mistakes and get the first planes ready to fly, and we’re the ones who will be building 787s on two lines in Everett – the main line and the new surge line — while they’re still filling in swamp land in Charleston.

Without us, the Dreamliner is just a pipedream. Let’s focus on making it a reality, and quit stewing and fretting about who said what and when.”

It’s important for the president to see how just how much the general aviation industry has been devastated  by Obama’s and members of Congress’ negative remarks about business jets, Buffenbarger said.

The negative perception that  business jets are “fancy toys for fat cats,” have had an effect, Buffenbarger said. “Business aviation is vital to America’s economic recovery.”

“We watched as the president took his shots,” he said. “Let’s just say he owes us a visit.”

Buffenbarger has twice invited Obama to Wichita.

“With your help, I believe we can make that happen,” he said.

He urged them to call the switchboard at 202-456-1414 and leave a message for Rahm Emanuel, Obama’s chief of staff.

“Make it brief; make it businesslike; but make it clear,” Buffenbarger said.

The visit is imperative. “This industry hangs in the balance,” he said.

Members of the Society of Professional Engineering Employees in Aerospace have twice rejected the company’s proposals.

Polls are open today and Thursday from 11 a.m. to 7 p.m. at the SPEEA office at 978 S. Glendale.

SPEEA represents more than 700 Spirit engineers.

Union negotiators unanimously recommend acceptance of the third offer, which they call “new and improved.”

The offer includes:

• Guaranteed 3 percent bonus in 2010.
• Guaranteed minimum increases in 2011 and 2012, along with increases from market salary pools with no caps.
• Bonuses of 5 percent to 10 percent in 2011 and 6 percent to 12 percent for the final two years of the agreement if Spirit meets its targets.
• Hours worked above 40 hours a week are compensated, depending on the circumstances, by pay or comp time.
• Priority for regular employees over contract labor during layoffs and shortened work weeks.

Negotiations began June 9. A federal mediator was called in for the third round of talks.

Check back tomorrow evening for the results.

The current contract expires Monday. The union represents about 900 hourly employees at in Wichita.

Union negotiators are unanimously recommending acceptance.

The offer includes wage increases of 2 percent the first year and 3 percent in each of the next two years. It includes a $6 increase in pension benefits to $50 a month for each year worked. On health care premiums, the company continues to pay 85 percent of the cost in the first two years. That declines to 80 percent in the third year, although a new health care plan put into place retains the 85/15 percent split.

The offer also increases the number of weeks of severance pay if an employee is laid off because of subcontracting and it extends recall rights.

Health care and job security are two top issues.

“It’s too early to tell,” how the talks will go this week, said Machinists spokesman Bob Wood.

Stay tuned for updates on the talks this week.

On Tuesday, the union, the Society of Professional Engineering Employees in Aerospace, presented the company with a counterproposal to the one engineers rejected earlier this month. The company countered today.

But the two sides have not reach agreement on the main issues. Talks resume again tomorrow.

The union represents about 900 hourly workers at the Learjet facility in Wichita. The current contract expires October 5.

In the last round of talks three years ago, workers struck for three weeks. It was the first work stoppage in the Learjet plant’s history.

Bombardier spokeswoman Danielle Boudreau declined to comment on the upcoming negotiations. Machinists union president Steve Rooney did not return calls for comment.

The negotiating team and council for the Society of Professional Engineering Employees in Aerospace’s Wichita engineering unit recommend rejection of the offer. Last month, 91 percent of those voting rejected  Spirit’s first offer.

Polls will be open from 1-3:30 p.m. at Century II’s Mary Jane Teall Theatre at 225 W. Douglas.

Talks between the company and the Society of Professional Engineering Employees in Aerospace continue today. SPEEA represents more than 700 Spirit engineers.

Spirit’s negotiators listened to the union on Thursday and said they would review the counterproposal and respond at discussions today, the union said.

Members rejected Spirit’s proposal last week by 91 percent because of issues concerning overtime pay, benefits, compensation and job security, the union said.

The Society of Professional Engineering Employees in Aerospace represents more than 700 Spirit engineers. The company presented the union with its offer on Thursday.

SPEEA will mail out ballots to members on Friday. Officials will begin to tabulate them beginning at noon on July 23. In the meantime, the union will hold lunchtime meetings nearly daily to explain the offer and answer questions, said SPEEA Midwest director Bob Brewer.

The company and the union held fruitful discussions, said Spirit spokesman Ken Evans.

“We recognize that we needed to put forward an offer that was prudent in this economic time and also further align our package with the market,” Evans said.

Unlike previous offers, Spirit’s proposal offers wage pools using market benchmarks based on the overall market for engineers. It also includes a variable pay plan.

The good news is there remains a market for engineers around the country, Brewer said. “You just don’t see that going away.”

The plan also contains some risk.

“(The variable pay plan) could be very rewarding if the economy picks back up, and the company performs well,” Brewer said. But “it’s a little risk-reward factor put into this thing.”

The offer increases medical contributions on one health insurance plan, but decreases costs in another plan. Spousal co-payments were eliminated in the offer. But co-payments for office visits increase, Brewer said.

The offer included increases in life insurance and vision benefits.