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Health insurance leads list of disputes for Boeing, union

By Eric Fleischauer
DAILY Business Writer

eric@decaturdaily.com 340-2435

Health insurance and retiree medical benefits are among the main sticking points between Boeing's Decatur plant and a union as employees vote on a possible strike this morning.

After three weeks of negotiations, The Boeing Co. presented Local Lodge 44 with what it termed its best and final offer Wednesday. The local negotiators for the International Association of Machinists and Aerospace Workers recommended its employees reject the contract and authorize a strike.

The vote is taking place at the Decatur Utilities conference hall at 1002 Central Parkway S.W. from 9 a.m. until noon today. The bargaining unit includes 305 employees.

The average wage at Boeing is $19.29 per hour. Average union dues are $40 per month. Employees receive 12 paid holidays per year.

Employees will vote on two issues. First, they will vote on whether to accept the proposed contract. If more than 50 percent vote to accept it, the contract will take effect.

If more than 50 percent vote to reject the proposal, employees also will vote on whether to strike. A strike will go forward only if at least two-thirds vote for it.

If a majority vote to reject the contract, but fewer than two-thirds vote for a strike, the agreement will go into effect despite the rejection vote.

IAM spokesman Bob Wood expected to have the results, which will be tallied by local union members, Saturday evening.

A strike would be costly for both sides. Boeing already has two satellite-launch schedules at risk because of an IAM strike, scheduled to start Wednesday, at its launch facilities in Florida and California. A strike at the Decatur facility, which is Boeing's sole producer of Delta-series satellite-launch vehicles, could delay future launches.

The cost to employees would be more immediate. For the first two weeks of a strike, the employees would receive no pay. Beginning in week three, IAM would pay striking employees $150 per week, less than 20 percent of the average employee's pay.

Information regarding the specific contract disputes came from various members of the management and bargaining unit. Most of the information was provided to THE DAILY on condition of anonymity, but was verified through review of the contracts proposed by the union and management during negotiations.

Some provisions of the proposed 42-month collective bargaining agreement are favorable to employees. The main provisions contested by the union negotiating committee include:

  • Health insurance. The Boeing proposal increases employee costs for traditional health insurance, the type of coverage most employees elect. It increases deductibles for family coverage from $600 to $900. It increases the percentage of total premiums employees must pay from 5 percent to 10 percent, increases the cap on the employee's premium contribution and decreases prescription coverage. The proposal eliminates the Boeing contribution for office visits before the deductible is met. The Boeing proposal also drops its contribution on covered medical services from 95 percent to 90 percent.
  • Retiree medical insurance. The existing agreement provides retiree medical insurance to cover the gap between retirement and Medicare eligibility, which begins at age 65. The proposed contract eliminates retiree medical benefits for new hires and reduces company contributions toward the premiums for some active employees.
  • Wages. The proposed contract provides a $3,000 lump sum to each employee in the first year of the contract and a $1,500 lump sum in November 2008. The union prefers general wage increases to lump sums because they would likely remain in effect through the duration of an employee's work life. Boeing's proposal provides 2 percent raises in November 2006 and November 2007 and a 2.5 percent raise in April 2008.
  • Pensions. The proposed contract increases the pension multiplier from $54 to $65, an increase some local negotiators said was acceptable. Monthly pension benefits are calculated by multiplying the multiplier by the number of years of service. Thus, at the $65 rate, a retiree with 10 years of service would receive a $650 per month pension.
  • Seniority progression raises. The existing contract gives employees who are below the top of their pay range 30 cents per hour raises three times a year. The proposed contract gives those raises two times a year.
  • Cost of living. The union wants a cost of living adjustment for employee wages, a provision included in neither the existing contract nor the proposed one.
  • Off-site work. The proposal eliminates a 75 cents per hour wage increase that applies when Boeing employees work at non-Decatur sites. Because employees frequently must travel to launch sites, and accumulate significant overtime during these assignments, the reduction involves a significant wage reduction.
  • White-collar returns. The existing and proposed contracts permit Boeing to move bargaining-unit employees to salaried status and later return them to the bargaining unit. If returned to the bargaining unit, their salaried time counts toward bargaining-unit seniority. Some local union negotiators object to this arrangement because they fear the white-collar employees will be used to continue production in event of a strike. The plant has more salaried employees than hourly.

    Contract length

    For different reasons, Boeing and the union prefer a 42-month contract to the existing 36-month contract. Boeing favors the change because it reduces IAM clout. Most of Boeing's IAM contracts expire at about the same time, so simultaneous IAM strikes can cripple Boeing production.

    Local union members prefer a 42-month agreement because the next series of negotiations would be in April, reducing the likelihood that a strike would disrupt Christmas holiday pay and a lump sum payment in November. They feel the pre-Christmas timing of negotiations exerts unfair pressure on employees during negotiations.

    Workers in Boeing's lower labor grade make between $9 and $22 per hour. The higher grade employees make between $11 and $25 per hour.

    Huntsville Boeing employees will vote on a similar proposal this afternoon.

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