For many Wichita working stiffs, the news surely prompted a double take: $61,440 in cash and stock for each of the 4,000 Machinists at Spirit AeroSystems. The startling bonuses will be the result of last week’s initial public offering of Spirit’s stock. For Spirit’s Machinists, they’re also the realization of a promised trade-off for the wage and benefit cuts accepted after the Canadian investment firm Onex Corp. bought the former Boeing commercial division in June 2005. As the bonus news revives local debate among union and nonunion workers, it leaves some out — including Spirit workers represented by the Society for Professional Engineering Employees in Aerospace (who didn’t take wage cuts) and the more than 1,000 workers laid off in the sale. But the windfall promises to sweeten the coming months for thousands of area families and the broader local economy, further confirming that Spirit’s success is Wichita’s success.
Posted by Rhonda Holman
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79 Comments
Hopefully, some of the cash will be banked for the inevitable downturn.
The great understanding of having money is to control spending and avoid creating debt.Many of the employees of the aircraft industries have learned how to get their money but fail miserably at saving their money; I wish them some good luck.
I am also hopeful that the employees receive some good advice about the income tax effects of the receipt of stock as additional bonus compensation. I would caution the recipients that the necessary withholdings for income taxes and social security will come from paychecks.
I wonder what all the people who trash talked the striking Spirit union members will have to say about this.
Meant to say Bombardier striking union members.
It is organized labor that brings working people corporate concessions such as this.
I hope that when these union people get the check and find that $25,000 of it has gone to the goverment, they will get on the right side for once. They had better cash it quick, the Dems will pass a bill asking for more of it.
How long before we hear from the crybaby union employees that 61K wasn’t enough?I hope this 61K keeps these whiners quiet for a decade.
There’s going to be a lot of brand new pickups and bass boats and RVs being bought this spring.
The machinists will expect this kind of compensation every contract now, and before you know it, Spirit will become the next Delphi.
Strange how no one can feel glad for these workers. Yes, some may blow it all, but hopefully others will be knowledgable and wise.
The former Boeing/Spirit workers have been through a lot. They’ve earned some compensation for their trials.
I will buy Motorcycles, Guns, and lapdances. The rest will be spent foolishly.
“Strange how no one can feel glad for these workers. Yes, some may blow it all, but hopefully others will be knowledgeable and wise.”
Our overlords have trained us well. Keep us bickering and divided.We have become a silly little people.
This really had nothing to do with the union striking or not striking. A corporation that knows it’s bottom line said we can pay you this much and no more. The union leaders finally accepted this as the final offer. Now the company is rewarding the hard work that went into making them have a profitable year. I bet the SPEA union wishes that had taken the pay cut.
Maybe Spirit finally realizes that a corporation is only as good as its employees?
Hopefully this will be a start for other corporations to be so generous with their employees and start treating employees with respect.
As far as the stock goes, as long as the stock goes up, these bonuses are fine – but when the stock starts tumbling – watch out!
And that posting about the tax efects is right on the money. And don’t worry about the Democrats taking it all – this is 2006 and the 2006 tax laws apply. These were already put into place by Republicans!
This puts the lie to the statement that only the rich got tax breaks under Bush. I bet none of these workers think they are rich but they will sure benefit from the capital gains tax.
I am happy for anyone who receives such a nice bonus…makes me wish I had married Rosie Riveter.
61 large is nice, but it is a long way from being rich and I think most people know it.
And who among us doesn’t know about the IRS?
This is NOT the result of organized labor. Not even close. In fact, organized labor wanted to DUMP Onex. They voted down the initial contract offer. They voted down the BAFO (best and final offer). They hated the philosophies of Onex (now Spirit). They thought they could kill the sale of Boeing by being a hostile entity.
In fact, they were all fired. Remember? Then, they were hired back selectively. Those that were the most vocal against the sale weren’t included. Those with long seniority (and likely less productivity) were passed over. They picked workers that were eager to start a new company with lean initiatives and a focus on profitability.
The promise was this: think big, be a part of a team, do your job effectively, and you’ll benefit. Act like owners, and you’ll be rewarded like owners. This is capitalism, baby. This is the quintessence of a company working together to achieve.
If the old “organized labor” mentality was still around, none of them would be seeing this kind of bonus – and likely, none of them would have a job.
And it also helped that Spirit recently went public in order to give stock with cash for this bonus. I’m interested to hear what the executives at Spirit will be getting for their bonuses. Does anyone know?
Ksgoofball
I don’t think we need labor commentary from a kept man.Did Dr. wife provide your last commentary? You are a little wordier than usual.
Those workers showed Onex (now Spirit) that they meant business. This is how you have to get managements attention now days.
JR,If it helps you sleep at night, feel free to use what ever logic you choose.
Bottom line, where are the “old guard” machinists in this equation? — answer: unemployed.
Suza,The average wage of a Spirit worker is probably somewhere in the $15-20/hr range. So, a $60k bonus is worth about 150-200% of their annual pay.
I would imagine that executives get something similar. But, who really cares? If the company is growing and profitable – everyone will benefit handsomely.
And where would Boeing have been if those “old guard” machinists had not built that company into the one that Onex wanted to purchase so badly?
Experienced workers are the gold of a company and when the mine is stripped of that gold, there is no more gold – just a big black hole.
If there’s a God in Heaven, KSGoofNut’s job will be outsourced to Delhi three years before he retires.
Just as he starts to draw his pension, his former company will declare bankruptcy and he will get nothing.
His stock portfolio, once worth a million plus, will because of CEO malfeseance won’t even generate enough interest to pay his rent.
Then we’ll see who hates the government, eh?
Vaughn: Great point. I wish every one of those 4,000 could read, and heed, your warning. Many better really enjoy December, because January is going to blow them away, with a lot more than just cold air. this time.
Huh golfball
Last I heard, Spirit was having to recall lots of the folks they let go.
Aw hey but don’t let facts get in the way of your little anti-union screed. I UNDERSTAND your envy and hatred of workers who organize and stand up for themselves. They make you feel small.
Ah ha, the plot starts to thicken.
KS Goof nut’s WIFE earns the family money.
Oh that’s rich, that’s classic.
Well, enjoy putting while Dr. Mom is slaving away at the office, Golf Nuts.
Hehe, typical liberal: when the facts fail you, resort personal attacks.
But, since you brought it up, I make about double what my wife makes. She’s an educator – remember? Also, I don’t have a company-owned pension. I have multiple retirement vehicles: 401k – widely invested over many industries and individual companies, my own mutual funds (managed quite effectively by someone very close to me), and my own real investments.
Only a fool would put his future in the hands of one CEO or one organization.
And I HAVE had my job outsourced. TWICE. But I didn’t whine about it, nor did I expect the government to support me. I adapted, retuned my skills, and it’s worked out nicely. I’ll do it again, if necessary.
Suza,I’m pretty sure Onex didn’t buy the company for its “gold” of employees. Otherwise, why would they fire them all immediately upon consummation of the deal?
And, then not hire the most experienced (and least efficient) workers back?
I’d love to stay and continue this friendly debate….but…
My 7 yr old son and I are off to Lawrence to watch KU dismantle Dartmouth.
Rock Chalk!
[Notice how I haven't personally attacked any of you? Let this be a lesson in how to play nice. =) ]
Ciao!
Uh huh
Lovely day out. I’ll do the bonedig I need to later….
Wait a sec, first Goofytesticle’s wife is a scientist with a PhD. working with the human genome project, and now she’s an educator?
First he worked for someone’s company, and now he’s a business owner.
Someone has trouble with the truth it seems.
The machinists make only 15 bucks an hour?
I presume from Golf’s description that his spouse is a University professor, doing biological (human genetics) research.
Golf: perhaps too late, but raise the roof for me! Also, please let your 7 year old grandson enjoy the total ambience of the experience at Allen, and stay after the game to hear what that incredible pep band plays as the attendees file out.
Rock Chalk!
“Last I heard, Spirit was having to recall lots of the folks they let go.”
I don’t know where you’re hearing that, but it definitely isn’t true.
Basketball . . . the sport the boys play while the men wrestle.
Capn, an old mat monger, I presume?
I love the way KSGoofball thinks–people who put their money in Enron were “fools.”
Yup, sure, the fact that Enron tanked along with Arthur Anderson and Tyco and Adelphia and MCI . . . that didn’t hurt everybody else’s stock valuations at all, did it?
Nah.
Each investor lives in this free-market vacuum, according to the right wing GoofNuts. The actions of one has no effect on anybody else.
Men in tights. eh, no thanks.
Vaughn– hehe, how’d ya guess?
Tights? I didn’t wrestle in the 50’s, Todd.
We wore singlets.
It’s easy to tell who is corporate and who is laborer around this forum.
But the truth is that to be long-term successful, a company needs both management and labor. Without the cooperaton of both sides it is an empty company.
You know, Golfnut, I believe in Karma. Whatever you do, or support your big business to do to make you more profit, will come back to you ten-fold.
I believe we as humans have a responsibility to live with pride and dignity. Some of your big business tactics just don’t sit right with me or the majority of the rest of decent Americans.
Sunny, I agree; however, capital, as in $$, is more scarce than human capital, i.e., labor, and, in the increasing technical world in which we live, many things which have traditionally been accomplished through labor can now be done via robotics, etc., which take the other kind of capital to procure.
Suza, I also agree with you; however, to effect any meaningful change, at least in publicly held corporations, you will need to obtain the agreement of a majority of the stockholders.
It’s too bad that the supposed to be a NEW AND IMPROVED COMPANY, (SPIRIT) can shell out this amount of cash right in the face of the salaried employees without so much as a thank you for your hard work also. How about the part where they begged the salaried employees to buy stock so they could up the anti for the union members. It worked tho !!!
Good news and good timing for Spirit and their employes/stockholders.
It’s beginning to look a lot like Christmas…
zero, the bonus was a part of the negotiated contract with the Machinists’ Union, IIRC.
“…they will sure benefit from the capital gains tax.”
I assume you are being sarcastic, because these poor guys are going to get killed by capitol gain taxes. Speaking as one who knows. It will be a fine welcome to the world of investment income.
Zero
Like suza said…..Karma.
So much for the theory that companies like Spirit value hard work or company loyalty.
Cap I hate to admit but we have something in common. I spent last weekend at Oklahoma University watching some great college wrestlers from Kansas. We have quite a tradition here.
Steven Davis, how will they be “killed” by the capital gains tax? They may well have a shock when it is pointed out to them that the receipt of stock, as a bonus (compensation income) is subject to income taxation at the “normal” rate. However, should they hold the stock for the one year period before sale, and, remembering the $26/share basis they have therein, for federal purposes, any gain on sale will likely be taxed at a maximum of 15%, rather than the 25% bracket rate it appears most are otherwise in. Kansas, of course, has no special rate for capital gains, so likely the gain (selling price less the $26/share basis) will be taxed at 6.45% .
“(SPIRIT) can shell out this amount of cash right in the face of the salaried employees without so much as a thank you for your hard work also.”
So you would have taken a 10 percent pay cut with a smile, with the hope that you’d get something down the road? I doubt it.
They took more from the workers, than the bonus will cover. Many lost their chance to retire at a decent age because of the sale. Between the wage and benefit cuts Onex isn’t giving the workers anything. And the good workers that didn’t get to keep their jobs really got screwed.
Yes, Todd, if I believed in the company and what they were promising, I would have. Likewise, if I didn’t, they could have stuffed a 10% raise, and I would have gone elsewhere.
SPEEA has been an ongoing joke for close to two generations now, and their promises are far more suspect than Spirit’s. WEA was a far better bargaining unit, but they were ousted because the Machinists’ Union thugs didn’t want a group of sharp engineers they could not control. So they got their lackeys in there.
I remember it well, as my father was one of the founders of WEA.
“Kansas, of course, has no special rate for capital gains, so likely the gain (selling price less the $26/share basis) will be taxed at 6.45%”
That does not sound too bad and I may be wrong on the “killed”. My experience was in 1990. I had sold home, purchased one for considerably lesser value and being dumb as I was I thought the $15K I recieved in equity money was mine. If I am recalling correctly, I think I had to pay $4K in federal and state taxes. Which maybe isn’t too bad, but psychologically, I felt like all of that money should have been mine. It wasn’t. I hope the guys getting this bonus, get good advice. I should have sought it, but did not until it was too late.
Vaughn,Lets say you are correct and the tax rate on the investment income will be 6.25% – when I multiply .0625 times $61,440 (assuming that this is the correct number), I get $3,840 which would be their tax burden. That does not sound too bad, but I hope they go to the trouble of talking to some financial advisor on what would be best in their personal circumstances.
Steven Davis, I hope so, too. On the sale of the house, sounds like you got caught by one of the quirks in the old law concerning the purchase of a replacement residence. The $4K figure you cite for total income taxes on the gain sounds about right, given the law at the time.
Also, I note your computation of taxes was, in essence, applying the Kansas rate to the total amount. Don’t forget the federal “bite”, which, given the figure cited earlier by someone, would place them in the 25% bracket federally; thus, there would be a substantial decrease in total funds due to federal income taxes. Add to that the FICA, which will be applicable to at least some of the total bonus, at a total of 7.65% (up to total income of ~$90,000 – bonus + regular wages), with the medicare tax of 1.45% withheld on that part of the bonus + regular wages > $90,000, there is likely to be somewhere around 39 to 40% reduction in the total, due to required withholdings. Just firing from the top of the head, here. Each person’s situation will be different, of course; but for the most part, should be generally accurate.
Also recall that the stock part will not be “paid” until 2007 (March, IIRC). The rub there is the requirement, under the appropriate rules governing withholding for FICA, income taxes, etc., the taxes on this non-cash compensation will be withheld from the “normal” wage check. I’m not too clear on how that works, but I know there will be a greater reduction than normal in the paychecks until the requisite taxes are paid.
“I’m interested to hear what the executives at Spirit will be getting for their bonuses.”
Actually, the executives didn’t get anything out of this deal, it was just for the IAM workers (meaning no engineering, finance, or office workers in general). On the other hand, they were probably able to buy plenty of the stock offered to employees in the IPO – unlike most of us who couldn’t afford to buy a minimum of 50 shares with less than two weeks notice (over $1200 at initial estimates).
And unlike many of you negative locals, I REALLY wish I had some of that stock – I believe that the company is and WILL do great!
To do the correct calculation:.0645 times 61440 = 3962.88
If you are getting one of those bonuses, it would be worth it to talk ahead of time to someone who knows what they are doing with this type of tax liability — maybe Vaughn Tolle would be a good choice. My opinion, only.
I am so happy for everyone at Spirit and hope it gets better for them. I retired but I have done better than if I could have stayed. I just hope they save their money because they will need it during down swings. Spirit will operate like the old Boeing by laying off heavily in every downturn. If you don’t save 20% of everyting you make, you will probably end up old and broke with no one wanting to hire you, because it cost too much to use you, because of your medical costs.
Whose yer daddy???Why it is the military-industrial complex, that’s who!
Oh – a whole new income tax bracket!
I think it’s awesome they got such a great bonus. Shows you the benefits of capitalism. It’s a great example!
They wouldn’t ever get a bonus like that in a leftist socialist state. Makes you proud and happy to be an American, that’s for damn sure!
Does every machinist get the 61K? Because I heard it is only the FORMER Boeing employees, people who started when Spirit started. Not any of the guys hired afterwards. Any answers?
Well…That was a blowout of a game. It was over in the first 3 minutes. C’est la vie. Dartmouth is a fine university – without much of a basketball team.
PeeMom, I’ll follow my own advice and avoid personal attacks, but…What did you miss when I answered the business owner question for you yesterday? Do you have selective hearing/reading?
Vaughn, you are correct. My wife is a professor/researcher. And we stayed at the Field House until the pep band stopped playing. Man that’s an incredible venue to see a basketball game. I’m a KU grad, but I still get chills everytime we go back for a game. This was my son’s (not my grandson – I’m still a youngster) first visit to AFH.
Sunny, You’re right – companies need both executives and laborers. And both should be treated as valued employees. We agree.
Suza, I too believe that humans should be treated with dignity. I’m not sure why my business ideals don’t sit with you. What’s good for the business is generally good for the employees. If you think I don’t believe these machinists don’t deserve their bonus – you’re wrong. I’m glad they’re getting it. It proves that ALL employees benefit when a company succeeds.
And Vaughn, nice explanation of the capital gains tax. Without a doubt, the stock would be subject to capital gains when it’s sold – but the smart employees will hold it for the long term. AND (as you said) if they sell it within a year, it’s taxed at the personal income tax rate which is ALWAYS higher than the capital gains tax rate.
Now – let’s play nice!
The lower rate replacement employees do not get the bonus. You had to be with boeing and then hired by Spirit at the time of the sale. Even some who were laid off and recalled later won’t get it, if the came back as “new hires”.
Those that get it – deserve it.
Those that don’t might learn a something about being a team player.
Golf, sorry about the misread on your son! Too bad his first AFH experience wasn’t a better game. What a venue for college basketball!
Off topic, continued: Did you have a chance to go through the Booth Family Hall of Fame?
Of course, we visited the entire KU Sports HOF at half-time. It was a great night – nevermind that it was pouring rain when we left, and I was parked about a half-mile away. We still had a blast.
When one looks at our finest universities, the one thing they all have in common?
Not much of an atheletic program.
MIT, Harvard, Princeton, Stanford, U of Chicago.
Of the first tier of colleges in this country, none of them have standout football or basketball teams.
Huh . . . go figure . . . priorities, priorities . . .
Rhonda really butchered the information in the original article.
It was the union that delivered this pay-off.
“To live like a Republican, you have to vote Democratic.”
Support unions and you support the middle class.
I’ve said this before, and I’ll say it again now – once more with feeling:
Labor unions are the bane of American economics. Labor unions only help the underachiever. Labor unions hurt the above-average worker.
The end.
I’ll go one step further.Labor unions are killing this country. Like many Lib programs, it seemed like a good idea at the time.
Yeah golfnuts?
Why don’t you tell that to the salaried folks who got all the appreciation the company voluntarilly gave them. Which of course was none.
Pissant moron
The salaried people were not asked to take a paycut, as the hourly people were. In fact, the raise pool for salaried workers was 3.5 percent, as it usually is. SPEEA did not believe in Spirit to the extent that they were willing to negotiate concessions to be eligible for a payout like the IAM is. Salaried workers are mad at someone, but it sure as hell isn’t spirit management.
The former Boeing/Spirit workers have been through a lot. They’ve earned some compensation for their trials. This should have included the SALARIED FOLKS ALSO. By the way, NO RAISE LAST YEAR either.
The stock shares were negotiated when the Union sold out.
THE SPIRIT PAYOUT/STOCK AWARD IS A DIRECT RESULT OF UNION/MGMNT. NEGOTIATIONS. WITHOUT THE UNION TO NEGOTIATE WITH THE AWARD WOULD NOT EVEN EXIST. FOR ALL OF THE SALARIED THAT DONT GET IT. YOU HAD YOUR CHNCE ON SEVERAL OCCASIONS TO TEAM UP WITH THE IAM BUT VOTED NOT TO
Right now, Spirit is resting comfortably on the contrails of Boeing. I don’t begrudge the IAM employees from getting the $61,044. I just hope they realize that the money came from the backs of those that were laid off, from those that retired since the take over and didn’t get any insurance coverage and from the SPEEA employees who are now working for Spirit. I’m certain that most of those that left the company do not miss the dictatorial environment that permeates the facility. It could be a great company but unfortunately most of the lazy, narrow-minded, buddy-buddy golfers are still running the place. All of them are now millionaires. When you invest in a company…regardless of the product; always take a hard look at the management as well.
Hurray (SPIRIT), Way to boost the morale of your salaried employees.
Here’s my take on it from the salaried side:Our weak union (SPEEA)negotiated with Onex and pointed out that most of us were making less than the market value for our job classifications. Onex agreed and didn’t force a wage cut knowing full well that when the IAM negotiated bonus came around, we salaried workers would be too weak to do a damn thing about it except whine.Our wonderful union got us a 5 year contract with a guaranteed 3.5% merit pool. That means each employee will get whatever portion of that 3.5% his boss believes he’s worth. Not necessarily the full 3.5%. If the powers that control the merit pool decide that one group of employees deserves more of the pool than others to “catch them up”, than a percentage of the pool is skimmed off the top to do that. I don’t know of anyone I work with that got the full 3.5%.The other problem I personally have is when I read and hear about how this is a “reward” for all the hard work the IAM workers did since Spirit began. I don’t totally disagree that they worked hard, some did, some do not, but the fact is we worked hard too. For over 20 years I’ve come in here with the attitude that I wanted to do what I could to help this company succeed. Not anymore. My attitude now is 8 hours a day for 8 hours pay. No more, no less. My reward is a lot less stress for the same pay. Let somebody elso worry about innovations to help the company succeed. It’s not my job anymore.Oh, and SPEEA, not anymore…