First-class engineering has long been the driving force behind the Boeing Co. and its dominance of the world's commercial airline market. Its engineers have been rightly proud of this heritage. So it was a surprise to many that these engineers cited what they called an eroding respect by management for their skills as one of the prime reasons behind the biggest engineering strike in U.S. history and one of the largest walkouts ever by white-collar employees.
The strike, which started Feb. 9, involves some 18,000 engineers and other technical workers represented by the Society of Professional Engineering Employees in Aerospace (SPEEA), primarily in the company's Seattle headquarters area. They walked out after rejecting two company offers. Management headcount figures indicate the strike involves 17,000 employees, slightly over 80% of 22,000 employees represented by the union. SPEEA estimates that 90% of about 21,000 workers, or at least 19,000, joined in the strike.
Disagreements between the company and the engineers over benefits, bonuses, and wage distribution really don't amount to all that much money over a three-year contract (see box). In fact, one engineer estimated the difference at about $40 million, or "less than Boeing's electric bill for three years and far less than the billions of dollars at risk in the stare-down." While the monetary issues could be settled over the bargaining table relatively easily, the issues of pride and respect along with charges that Boeing was trying to bust the union won't be quickly forgotten.
"The key issue at the top level really is respect for the technical community at Boeing," said Charles Bofferding, executive director of SPEEA. "Since the merger with McDonnell Douglas in 1997, we believe there has been an obsession with short-term costs, to the exclusion of concern for both employ-ees and customers."
Many Boeing engineers have echoed these sentiments. As proof of a deteriorating commitment to engineering, they cited Boeing's reduced research and development budget, which supports engineering, and a "brain drain" resulting from workers leaving the company for other jobs, further eroding the workforce.
Boeing has denied any decline in commitment to engineering, along with the union-busting charges. While admitting that "the issue of respect is an emotional one that's difficult to get your arms around," Peter Conte, the company's public relations manager and strike spokesman, pointed out that recent attrition has actually been less than the company's normal annual rate of 4 to 5%. And he said the decreased R&D budget was expected because the company is in a "low period" at present, without a major development program underway since the four-year effort on the $150 million 777 jetliner.
Many of Boeing's labor problems appear to stem from its acquisition of Mc-Donnell Douglas. While this left Airbus Industrie of Europe as Boeing's only major commercial competitor, it also brought a different corporate mentality and culture into Boeing Co.
The fact that McDonnell Douglas was more accustomed to dealing with government contracts than trying to satisfy commercial customers called for "a different sense in how you handle things," said Paul Almeida, president of the International Federation of Professional and Technical Engineers (IFPTE), the AFL-CIO union with which previously independent SPEEA voted to affiliate last October. "Once you have a government contract to build a certain number of aircraft, it's easier to build in a certain profit margin. Competing in the commercial airline business puts different constraints on a company," he offered.
Personalities came into play, too, especially at the top. Boeing President Harry Stonecipher, formerly top man at McDonnell Douglas, has a reputation as a hard-nosed, bottom-line cost-cutter. Boeing Chairman/CEO Phil Condit, on the other hand, once a SPEEA member himself, enjoys a better rapport with labor.
"The story on Stonecipher is that he leaves bodies in the wake of wherever he's been. He has a different mindset than Condit," Almeida observed, calling the strike a battle between the company's two top brass. According to this scenario, Stonecipher criticized Condit for giving in too much to the International Assn. of Machinists and Aerospace Workers (IAM) to avert a threatened strike by that union. To counter that criticism, Condit was trying to show he could be tough and stand up to labor in negotiating with the engineers. Boeing denies any such struggle at the top.
Jim Dagnon, Boeing's senior vice president of people and the company's top labor strategist, also has been cast as a villain in negotiations. Many engineers believe he wants to bust their union.
"We see real antiunion bias from him," said Bofferding. Dagnon, who joined Boeing in 1997, came from the railroad industry "where labor negotiations were always a big fight," the SPEEA leader explained. "It looks like he's trying to continue that kind of fight."
Bofferding accused Dagnon of "putting his foot in his mouth" in comments published by The Seattle Times early in February. The article reported how Dagnon suggested that emotionalism may be clouding the view of SPEEA members who believe Boeing shortchanged them while giving the machinists a much richer contract. Dagnon said Boeing is changing itself from a company where engineers were "the center of the universe" to one where costs and efficiency matter as much as good airplane design.
Charges that Dagnon is a union buster are completely untrue, Boeing spokesman Conte contends. "He came from the railroad industry, but he was once a union member and a union leader before he ever moved into management. His track record is not one of busting but of cooperating with unions."
RESPECT VERSUS OPTICS
As for Boeing trying to break the union, Conte dismisses this by pointing out that in the last three years the company has negotiated 46 union contracts without a work stoppage. Twenty-eight were settled in 1999 alone. "That record speaks to a company that strives to work with unions and not against them," Conte said.
Nevertheless, even federal mediator Richard Barnes noted that at one point the two main strike issues concerned "respect and optics," said Almeida. According to the IFPTE chief, Barnes said the union was "looking for respect for what they do and the company was concerned about optics, about how the package looks."
What this means, Almeida explained, was that "if the package looked too good, it could spur union organizing in other groups within the company that Boeing might not want to be unionized." He says that Boeing wants to avert this situation by decimating SPEEA or making it appear extremely weak so it will not become a springboard to other organizing.
A major force spurring SPEEA to hook up with the AFL-CIO was that it no longer represented the majority of engineers and technicians within Boeing after it merged with nonunionized McDonnell Douglas. The merger slashed SPEEA representation from about 85 to 43%. Since then, SPEEA has rebounded to 64% representation, according to Almeida. The entire Boeing Co. is about 40% unionized, he estimates.
SPEEA's only other strike was a one-day protest in 1993. The current one was not expected to last long, either, for the union has no strike fund and a long strike would delay Boeing deliveries. Boeing engineers authorized as designated engineering representatives (DERs) must sign off on all aspects of an aircraft, and a given plane may require signoffs from more than 50 DERs before it can be certified by the FAA and delivered.
Of Boeing's 416 DERs in the Seattle area, all but 24 are honoring the strike, SPEEA said. This quickly created delays in commercial deliveries and parts backlogs. The strike also has delayed some testing and production on the Air Force F-22 fighter jet. Because commercial deliveries aren't considered late as long as they occur in the delivery month, Mar. 1 was regarded as a key target date for settlement. Contract penalties would then start to hit Boeing and possibly reduce the company's stock price further.
"SPEEA may bring Boeing to its knees more quickly than the machinists ever did because Boeing can bring in managers to buck rivets, but they absolutely cannot bring in managers to sign FAA paper," one nonunion insider was quoted as saying. A picketing Boeing engineer put it this way: "If we don't sign off on a plan or design, the planes don't get made. If we don't approve the part, there's nothing to build." Nevertheless, Boeing remained confident it would meet this year's delivery commitment of 480 to 490 jetliners.
While other engineers and employers outside Boeing have been following the walkout, the impact on them will be difficult to gauge, for there aren't any other white-collar unions in the technical community approaching SPEEA's size.
As for the future at Boeing, Almeida believes Boeing "must make an effort to reestablish rapport with their technical community. What's driving all this, and it's been coming for a long time, is the emphasis on the bottom line for the next quarter. There needs to be a healing process, such as developing something similar to a partner-ship or agreement that will enable better dialogue between the technical and corporate community. This will take some time, because strikes are never pleasant, and they don't usually happen with white-collar workers. The company's intelligence sorely misread this whole situation."
|SPEEA at a glance
$36,900 to $139,300
$21,300 to $81,150
|Years at Boeing
|Source: Society of Professional Engineering Employees in Aerospace.
MAJOR MONETARY STRIKE ISSUES
Boeing: Offered raises to engineers from a pool equaling 5% of the group's total pay in the first year of the contract, with an additional 3% pool available for select employees. The pool would total 4% in the contract's second and third years. Pools for technicians would total 5% in first year of contract, and 4% in second and third years. But individual raises for engineers and for about half of the technicians would be given at the discretion of supervisors. The company wants flexibility to reward top performers and boost pay for underpaid workers.
SPEEA: Wants more raises guaranteed for all workers rather than leaving them largely up to supervisor discretion.
Boeing: Offered none.
SPEEA: Wants bonuses similar to the 10% bonus given the machinists union.
Boeing: Offered none.
SPEEA: Wants extra raises pegged to inflation. Machinists received these, averaging 1.4% each of last four years.
Boeing: Offered life insurance of $32,000 and 50% matches on 401(k) plans, with no option to buy long-term disability insurance.
SPEEA: Wants death benefits of 2.25 times salary, long-term disability coverage, and 75% matches on 401(k) plans.