Boeing, Union Face Off Over Healthcare Costs in Long Beach
By DAVID GREENBERG
Unionized workers at Boeing Co.’s Long Beach operation are the latest to face employer demands for healthcare concessions in talks on a new contract.
Boeing has asked nearly 2,850 people working on the Air Force’s C-17 cargo plane and 717 commercial jet to help cut costs in a pact to replace the four-year contract that expired April 25.
The employees, who belong to Lakewood-based Local 148 of the United Automobile, Aerospace and Agricultural Implement Workers of America, approved a strike authorization by a nearly 95% margin on April 14, according to Bill Schultz, president of the local.
The UAW has a history of friction with Boeing, which has laid off thousands of workers since the company bought McDonnell Douglas in 1997. Local 148 members staged work slowdowns in 1986 and 1987 to protest having to work more than a year without a contract.
But the strike vote appears to be more a symbolic show of solidarity than an actual bargaining tool,particularly for workers on the 717 program, which has endured several rounds of layoffs in the past three years and has teetered on extinction due to slow sales.
A strike might lead Boeing to shutter the program permanently,something analysts have said could occur by the end of the year anyway unless more orders come in.
“It’s obviously not a good time for the industry,” said Daniel Mitchell, a University of California, Los Angeles professor of public policy and management. “Union leadership would probably want to avoid (a strike.) Usually if you have some economic adversity, some kind of adjustment in expectations is called for.”
Although neither side would release their contract demands, it is unlikely workers will walk away with the gains they made during the last negotiations: a 10% pay raise over four years, a $2,500 signing bonus and enhanced healthcare and pension benefits.
Boeing was set to give its best-and-final offer by Sunday. UAW negotiators then are expected to present it to the rank-and-file with a recommendation to accept or reject the offer.
Media Blackout
Both sides have agreed to a media blackout on details of the negotiations. But on a company Web site, Boeing made it clear this round of negotiations will take into account the aviation industry’s post-Sept. 11, 2001 climate.
“The realities include stiff competition at home and abroad and escalating costs for healthcare and other expenses,” the memo stated. “Those realities will play a large role in the offer the company makes to the union negotiators as Boeing’s best and final offer.”
The memo also hinted that job security might hinge on workers’ acceptance of concessions.
“If Boeing is not successful in the market, it cannot continue to provide good-paying jobs,” the memo stated.
Company officials said the prospect of layoffs is not being used as a bargaining chip during the negotiations.
“I don’t see any correlation between those two activities,” said Cynthia Taylor, a spokeswoman for the program.
Schultz hinted that the union is seeking a pay raise for existing workers. The union also wants to maintain existing health benefits for current and retired employees, who currently pay less than 5% of their healthcare costs.
Asked about the strike authorization, Schultz said it only “gives our negotiating team the strength to negotiate with the membership’s backing.”
UAW employees at the Long Beach plant currently have annual wages and benefits packages that average $76,440 per worker, not including overtime, said a source who requested anonymity. About $47,800 of that is wages, the rest is benefits.
At Long Beach, 2,435 UAW members work on the C-17, while only 366 work on the 717 and 48 in the Shared Services Group. Negotiations also involve 63 members of Melbourne, Ark.-based Local 1482, which makes aircraft components.
Boeing employs close to 10,000 people in Long Beach, many of whom live in Orange County.
Boeing has been churning out only one 717 per month,a fourth of the original production for the program that once employed 3,500 workers.
“There have been encouraging signs that the U.S. economy and global air traffic are recovering and airline interest is slowly increasing, although demand for the 717 remains low,” Boeing said in filings with the Securities and Exchange Commission in late January.
An additional 5,000 people lost their jobs in Long Beach from 1995 through 2000 when the MD-11, MD-80 and MD-90 commercial jet programs were cancelled, leaving the 717 as the last vestige of the McDonnell Douglas era.
With commercial programs so weak, UAW negotiators are attempting to leverage the success of the profitable C-17 program.
Yet even the C-17 program has endured 400 layoffs since 2002, despite a $9.7 billion contract for an additional 60 cargo planes. The company had to reduce the cost per plane to $152 million from an original $198 million to win the Air Force’s favor.
Greenberg is a staff writer with the Los Angeles Business Journal.
