Strike-related Questions & Answers

UPDATE IAM best and final offer:
questions and answers

Contract Overview

Q. Why did the company send information about the contract directly to IAM-represented employees? Isn’t this in violation of labor laws?

A. From the beginning of these negotiations, Boeing committed to an open and transparent process. The company wants employees to know about the issues during negotiations and what the company is offering. Managers are expected to share information and help their teams understand the issues that affect their business.

Boeing respects the process for negotiating labor contracts and recognizes that the IAM bargains on behalf of employees. We communicated information only after the issue had been discussed with the union negotiations team. We also were responding to broad-based requests from employees that they have the access, opportunity and time to understand the issues that had been discussed with the union and evaluate the contract offer.

Q. How would Boeing summarize its best and final offer?

A. We believe this represents the best contract in the aerospace industry. It’s a great offer that recognizes and rewards the contribution our IAM-represented employees have made to the current success of the company. It allows the company to remain competitive and ensures that our success can be sustained and we can continue to meet our commitments to our customers.

Q. What’s in it for employees?

A. This is a generous offer that rewards employees in a number of ways. Our best and final offer, on average, would provide employees with approximately $34,000 in additional wages, lump-sum payments and incentive payments during the three-year agreement.

The contract offer includes:

  • General wage increases in every year of the contract of 5, 3 and 3 percent.
  • Cost of Living Adjustments projecting another 1.5, 0.8 and 0.5 percent per year.
  • Six percent of annual pay or $2,500 lump-sum payment in the first year of the agreement, whichever is greater.
  • A $2,500 first-vote ratification bonus payable only if the contract is approved by majority vote on or before Sept. 3.
  • A $2.28 increase to the starting minimum pay rates.
  • A 14 percent increase in the basic pension benefit that boosts it to $80 per month of each year of credited service. That makes it the best pension benefit in the aerospace industry.
  • Improvements to our already world-class health care programs by continuing to make available plans that require no payroll deduction from employees.
  • Enhanced health care, wellness, vision and mental health coverage.
  • Increased the lifetime maximum coverage to $2 million for every employee and dependent.
  • Provide health care coverage to same-gender domestic partners.
  • Boeing will continue to pay a substantial portion of overall health care costs, which means our employees will continue to pay less for health care coverage than most Americans.
  • We’re creating a new incentive plan designed with the potential to generate up to 20 days of extra pay for improving productivity. The first potential payout would occur in the third year of the contract.

Q. How does the pay and benefits package that Boeing is offering stack up in the industry/region/country?

A. We believe this is the best contract in the aerospace industry. We have offered an excellent package of pay and benefits increases that rewards our employees and allows us to attract and retain the talented people who design, build, support and improve the world’s finest aerospace products.

Q. In the initial contract offer there were several areas that were important to Boeing such as making Wichita a separate bargaining unit, switching future hires from the defined benefits pension to a 401(k)-style defined contribution plan, stop offering early retiree medical coverage to new hires and changes to outsourcing language. How did Boeing move on those issues?

A. Even though these remain significant issues for the company, Boeing made significant movement to address union concerns.

  • We withdrew the proposal for a separate Wichita contract.
  • We withdrew the proposal to create a new retirement program for individuals hired in the future.
  • We withdrew the proposal to discontinue early retiree medical for individuals hired in the future.
  • We withdrew the proposed changes on facilities maintenance subcontracting.

Q. Some employees say the company will offer a better contract if the best and final offer is rejected. What’s the company’s response?

A. This is our best and final offer. It’s a great package that takes care of employees now by providing a lump-sum payment, first-vote ratification bonus, increases to the minimum rates, a general wage increase every year of the contract, a new incentive pay program and improvements to an already world-class health care program. It also takes care of employees into the future by increasing the basic pension benefit to the highest in the aerospace industry. We believe that no one wins when there is a work stoppage. Not the company, not our customers, not our employees. We have worked with the union to present our best offer to employees. This is it, our best and final offer.

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Pay

Q. Has Boeing changed the way COLA is figured?

A. No. In the best and final offer, cost of living adjustments (COLA) will be calculated the exact the same way it has been for more than 10 years. Each September, COLA is added on to every IAM-represented employee’s base rate. Employees who hire in during the year or go on leave for longer than 90 days will receive a pro-rated COLA increase based on the amount of time they were on the active payroll during the past 12 months.   

Q. Why doesn't Boeing pay COLA for the last quarter of the existing contract? Shouldn't it be included in our best and final offer?

A. As a standard practice, Boeing’s collective bargaining agreements that include COLA provisions don’t provide for COLA payments during the final quarter of the contract. The reason for that is, during the final quarter of the contract, we are negotiating pay rates. When negotiating, it is important that pay rates remain stable so we all have an understanding of the base rates being discussed and the cost impact of proposed adjustments.

The last (2005-2008) contract agreement provided for 11 quarters of COLA, which excludes the last quarter. This is consistent with how we have calculated cost-of-living adjustments since we agreed to provide IAM-represented employees with COLA in 1965.

Q. In the summary of the best and final offer, Boeing projects that COLA will add 22 cents per hour to pay rates in the second-year of the contract, and 15 cents per hour in the third year.  Is it possible that the actual amount of COLA increase could be higher or lower than this?

A. Yes.  These estimates in Boeing’s summary of the best and final offer are projections based on economic forecasts from an outside vendor. The actual COLA payments will reflect the actual rates of inflation.   

Boeing included these projections to show the value that COLA provides employees. On average, COLA has added approximately 1 percent to an IAM-represented employee’s base pay per year since 1996.

Q. With the $2.28 increase in minimum rates, it sounds like an employee with one or two years at Boeing might make the same as a new hire. Is this true?

A. In some cases among relatively new employees, after a cost-of-living adjustment and general wage increase, their pay would still be below the new minimum in their pay grade. Under this proposal, these employees would be raised to at least the new minimum.

So yes, that would put these employees at the same rate as a new hire coming in tomorrow. However, these employees are ahead of new hires in terms of seniority, so they are further along the progression scale and would reach the maximum rate for their grade sooner.

Q. How is Progression affected by the minimum rates increase?

A. An employee’s position in progression is not impacted by the minimum rate increase.  Employees still receive a total of 12 progression increases before their rate is adjusted to the maximum rate for their pay grade.  While in progression, employees receive a $0.50 increase to their base rate every six months.

Q. There is some confusion about whether all employees in progression will receive the full general wage increases in the proposed contract. Can you clarify this issue?

A. All employees in progression will receive both the amount of COLA that they have earned (see the first question above) and the full general wage increases offered in the contract.

If these increases do not bring their base pay to the new minimum pay rates, they will receive an additional pay increase so they are earning the new minimum rates.

In the first year of the proposed contract, every employee in progression will receive both COLA and a 5 percent general wage increase.  Some employees will receive even more to take their pay to the new minimum rate.

In the second year of the proposed contract, every employee in progression will receive both COLA and a 3 percent general wage increase.

In the third year of the proposed contract, every employee in progression will receive both COLA and a 3 percent general wage increase.

Q. There is some confusion about the proposed $2.28 increase in minimum rates. Some employees who currently earn less than the new minimum rates believe that their pay will be raised only to the new minimum rate. Is this true?

A. Not necessarily. Under the proposal, every employee would receive a cost-of-living adjustment (for most, $0.37 per hour) and a 5 percent pay increase when the contract is ratified. If they are still earning less than the new minimum rate after receiving the COLA and 5 percent pay increase, their pay would be raised to the new minimum rate. So, all employees would receive COLA and a 5 percent pay increase; some would receive even more.

Q. How can employees calculate their new hourly pay rates under the proposed contract? 

A. The pay and benefits calculator provides an estimate of the total value that will be delivered to employees over the duration of the contract.  Employees can also estimate their new hourly rates for year 1 of the contract proposal by performing the following step-by-step calculations on their own:

Step 1:     Find your current base hourly rate
Example – Employee currently makes $13.28/hr as a Grade 4

(If you don’t know your current base rate, you can find that information in TotalAccess on the My Profile page, center column under My Boeing Profile, click “View my employee history.” If you have difficulty finding the information, please consult with your local Human Resources Generalist.)

Step 2:     Add COLA to current hourly rate
Example –  $13.28 + $0.37 = $13.65/hr

                  (For employees who started work before March 8, 2008, COLA will equal $0.37/hr. For those hired since March 9, or who have been on leave of absence longer than 90 days during the past 12 months, COLA will be $0.21/hr or less.)

Step 3:     To that new rate, apply 5% GWI for year 1
                  Example - $13.65 x 1.05 (5% GWI) = $14.33/hr.

Step 4:     If applicable, further increase hourly rate to the new minimum rates in proposed contract
                  Example – $14.33 + 0.67 = $15.00 new hourly rate for grade 4

Step 5:     If applicable, add shift and premium pay to your hourly rate to see your new base rate

Q. Are factory service attendants in Grade A eligible for the increases in minimum pay rates?

A. Yes. Factory service attendants in Grade A are eligible for the increase to minimum pay rate, which is $11/hr.   

Q. Will factory service attendants receive the general wage increases in the contract?

A. Those below the maximum will receive the general wage increases. For those at the maximum rate for Grade A, the general wage increase will be paid as a lump sum equal to 5 percent of their base pay in the first year of the contract, 3 percent in the second and 3 percent in the third.

Q. What pay increases are included in the contract offer?

  • General wage increases in every year of the contract of 5, 3 and 3 percent.
  • Cost of Living Adjustments projecting another 1.5, 0.8 and 0.5 percent per year.
  • A lump-sum payment in the first year of the contract equal to 6 percent of annual pay or $2,500 whichever is greater.
  • A $2,500 first-vote ratification bonus payable only if the contract is approved by majority vote on or before Sept. 3.
  • A $2.28 increase to the starting minimum rates.

Q. When will the new rates of pay go into effect?

A. The new pay rates become effective Sept. 5, 2008

Q. What is the ratification bonus?

A. Boeing will pay a ratification bonus of $2,500 if the contract is approved on the first vote on or before Sept. 3. The contract must be approved by more than 50 percent of the votes cast. The ratification bonus would be in addition to the lump-sum payment. It would be paid within 60 days of contract ratification.

Q. When will the lump sum be paid?

A. The lump sum will be paid within 60 days of contract ratification.

Q. How will the new incentive pay plan work?

A. The incentive plan rewards employees with extra days of pay for productivity improvements. Potential payouts are 0-20 days of pay with a target of 10 days of pay. Boeing will continue to develop specific details of the incentive pay plan and will include the IAM in their discussions. The first potential payout is in the third year of the contract.

Q. Are factory service attendants in Grade A eligible for the increases in minimum pay rates?

A. Yes. Factory service attendants in Grade A are eligible for the increase to minimum pay rates. The starting minimum pay rate is being increased by $2.28 from $8.72 per hour to $11 per hour.

Q. Will factory service attendants receive the general wage increases in the contract?

A. Those below the maximum will receive the general wage increases. For those at the maximum rate for Grade A, the general wage increase will be paid as a lump sum equal to 5 percent of their base pay in the first year of the contract, 3 percent in the second and 3 percent in the third.

Q. How is Progression affected by the minimum rates increase?

A. Progression is not impacted by the minimum rates increase. Current employees will first receive a cost of living adjustment and then the general wage increase (GWI) will be applied. After those two actions, anyone still under the new minimum rates will be adjusted up to the minimum rate for their grade. The current progression increases of $.50 per 6-months schedule is not impacted. Employees will receive their next $.50 progression increase 6-months from their last increase. Upon their 12th progression increase, their rate will be adjusted to the maximum rate for their grade. No changes were proposed to article 6.3 (a).

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Health Care

Q. Although the offer provides a general wage increase, much of that money will be used to pay for higher health care costs. Why is Boeing asking its employees to pay more?

A. The offer, on average, would provide employees with $34,200 in additional pay and incentive compensation during the three-year contract period. The offer also would increase employees’ average health care and insurance costs by approximately $200 during the 3-year contract. (The exact amount depends on the medical plan employees choose and their health care needs. Some employees would pay more than the average, and some would pay less.) The average net gain, when subtracting increased health care costs from increased pay, would be approximately $34,000 per employee.

Currently, Boeing pays an average of $11,200 annually in health care and insurance costs for each IAM-represented employee, while employees pay an average of $1,100 per year. At the end of the 3-year contract offer, it is projected that rising medical costs will increase Boeing’s average cost per IAM-represented employee to $13,200 per year, and increase the average cost for IAM-represented employees to $1,300 per year.

Q. Why are employees being forced to use generic drugs?

A. Boeing wants employees to use generics because generic brand drugs are therapeutically equivalent and typically less expensive than name-brand drugs. However, if your prescription drug does not have a generic equivalent, this program does not apply; you will continue to receive your name-brand drug as you do today. Also, if you cannot tolerate the generic drug, a waiver will be approved. These provisions do not go into effect until January 1, 2010, leaving ample time to work with your physician on what is most appropriate for you.

If you still prefer to choose a name-brand drug when a generic equivalent is available you'll be required to pay the generic copayment plus the cost difference between the brand-name and generic drug.

Q. What is Boeing doing to address the health care cost issue?

A. Rising health care costs continue to be a key issue for Boeing and other employers across the country. Boeing is actively working to manage cost increases by focusing on wellness and prevention. We educate employees about ways to improve wellness through diet, exercise, stress reduction, and lifestyle changes such as reducing use of alcohol and tobacco. We also provide incentives to employees and their family members by providing a $50 gift certificate if they participate in an online health risk assessment. Employee choices significantly impact health care costs. That’s why we provide health plan choices and information to help employees make informed decisions on becoming more efficient consumers of health care.

In addition, we’re taking action by working with employers, unions and other organizations to drive change in the health care market on both national and regional levels. We’re a leading member of the Leapfrog Group, which works to improve hospital patient safety standards and reduce preventable medical mistakes. On a regional level we’re working with the Puget Sound Health Alliance to share quality-of-care data, slow the rate of health care cost increases and improve outcomes.

Boeing is committed to providing high quality, comprehensive health care benefits. Our outstanding benefits are a competitive advantage in attracting the talent we need to be successful, and that is not changing.

Q. If I retire during this contract and am not eligible for Medicare, will I lose my early retiree medical coverage?

A. No,you will not lose your early retiree medical coverage. The language in the best and final offer regarding the Agreement expiration is meant to clarify that the agreement covers active employees and active employees who retire during the term of the contract and who continue to meet the eligibility requirements under the plan that was in effect when they retired.

Q. What improvements have been made to health care?

A. We made improvements to our already world-class health care programs. They include:

  • Increased coverage for routine physicals—including annual exams and well-child care—from $200 to $500 annually. In addition, Boeing will cover 100 percent of the costs of most associated tests and laboratory work, including colonoscopies, mammograms and pap tests.
  • Lifetime maximum coverage increases from $1.5 million to $2 million.
  • Provide health care coverage for same-gender domestic partners.
  • Improved coverage for organ transplants.
  • Increased non-network coverage for inpatient and outpatient mental health care from 50 percent to 60 percent; increased coverage for network outpatient mental health care from 80 percent to 95 percent.
  • Increased neurodevelopmental coverage from $1,000 to $1,500.
  • Increased life insurance and short-term disability coverage.
  • Increased hearing aid coverage from $600 to $800.
  • Increased eyeglass frame coverage from $70 to $90, and increased contact lenses coverage from $105 to $120.
  • Provided a health care flexible spending account, enabling employees to set aside money to cover health care costs on a pre-tax basis.

Q. Is Boeing still offering a $0 contribution plan in this contract?

A. Yes. We have agreed to continue offering a plan in each location that does not require a payroll deduction from employees. They are the same plans that currently do not require a payroll deduction. We have also agreed not to change the $0 contribution plans for the life of the contract.

Q. It appears that one of the health care plan options is changing from Selections CCP to Select Network EPO. Is this just a name change or are the plans different?

A. They are fundamentally the same plan. All network doctors currently in Selections are also covered by Select Network EPO. Just like Selections today, you only pay an office visit copayment and there is no deductible for network services.

The changes from Selections to Select Network EPO are:

  • No primary care physician requirement
    Select Network EPO members do not have to choose a primary care physician. They may receive care from any network provider covered by the plan.
  • No referral requirement
    Select Network EPO Members do no need a referral to visit a network specialist, except when seeking mental health and substance abuse treatment.
  • Limited non-network coverage
    Members must obtain all care from a network provider to receive benefits under the plan. The non-network coverage feature will be eliminated (except for certain emergency care and care for dependents that live outside the network area) as of January 1, 2010.

For more information on this plan please see Doug Kight’s Negotiations Update for Tuesday, August 26.

Q. What's changing with the prescription drug plan?

A. The current copayments for prescription drugs are not changing from what they are today. A mandatory generic drug program is being introduced. Many brand name drugs have a generic equivalent available. If you prefer to choose a brand-name drug when a generic equivalent is available you'll pay the generic copayment plus the cost difference between the brand-name and generic drug. For circumstances where participants cannot tolerate the generic a waiver will be approved when appropriate.

Q. What is "Out-of-Pocket Maximum"?

A. Out-of-Pocket Maximum protects employees and their families from catastrophic medical claims. It limits the maximum amount that they have to pay in any one benefit year for most services to which a coinsurance percentage applies. For employees that reach the out-of-pocket maximum, the plan will pay most coinsurance at 100 percent of the usual and customary charge for the rest of that benefit year. Last year less than one-half of one percent of member families paid enough in medical claims to reach their Out-of-Pocket Maximum.

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Holidays

Q. As part of this contract offer, will Boeing employees be paid for Labor Day 2011?

A. The proposed contract expires on September 3, 2011, which is prior to Labor Day. Labor Day 2011 is anticipated to be included as a paid holiday in the next contract.

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Life Insurance Benefits

Q. Does the best and final offer change the life insurance survivor income benefit plan?

A. Yes. The company has proposed to discontinue the life insurance survivor income benefit plan while at the same time increasing the life insurance amount. This gives the employee’s surviving beneficiary a greater benefit immediately. Survivor payments being made today and those that begin prior to Jan. 1, 2010, will continue to the full extent of the current benefit.

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Pension

Q. Are the pension plan’s joint and survivor options being eliminated?

A. No. However, there is some confusion between these joint and survivor options and a life insurance benefit with a similar sounding name (see above).

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Retirement

Q. Is the company taking away spousal survivor benefits?

A. No. We are not taking away these benefits. The company offered to increase the life insurance benefit from $32,000 to $36,000, in place of the survivor income benefit plan. Under this proposal, life insurance benefits would be paid immediately in full to any beneficiary the employee chooses, rather than the current survivor income benefit plan which provided a temporary monthly payment for a limited number of the employee's eligible dependents.

Please note, this change is NOT related to the joint and survivor benefit under the retirement plan, which remains intact in the contract offer.

Q. Why can’t Boeing increase the monthly pension amount higher than $80 a month, especially when the company is willing to pay its executives significantly more than its IAM-represented employees?

A. Boeing compensates all employees – including executives – relative to market benchmarks.

Prior to our contract offer to the IAM, the highest pension level in the U.S. aerospace industry was the $77/month per year of service earned by employees at Lockheed Martin. Boeing exceeded this with our proposal to the IAM, offering to increase pensions from $70/month per year of credited service to an industry-leading rate of $80/month. And Boeing is one of the few companies in any industry that offers a combination like our pension and our 401(K)-style retirement program.

The combination of Social Security benefits and Boeing’s retirement program allows IAM-represented employees the opportunity to retire, on average, with more income at retirement than in their last years of employment.

Q. How much will the pension benefit increase?

A. The pension benefit will increase 14 percent from $70 to $80 per month for each year of credited service. That makes it the best pension in the aerospace industry.

Q. Will Boeing continue providing early retiree medical coverage for IAM-represented employees?

A. Yes, Boeing will continue providing early retiree medical insurance for IAM-represented employees who retire during the term of the contract. IAM-represented employees in Puget Sound, Portland and Wichita who retire early may qualify for Boeing-subsidized medical coverage until they become eligible for Medicare.

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Sustaining our Success / Business Environment

Q. Why can’t Boeing guarantee job security for its employees?

A. The only real job security is gained by improving productivity and meeting our commitments to customers. The IAM is proposing changes to the existing contract that would fundamentally restrict Boeing’s flexibility to operate our business efficiently and react nimbly to changes in the aerospace market. Our current contract provides the IAM 180 days to bid on work, and to propose ways to improve processes to keep this work within Boeing.

These provisions have been in place for several years (at least since 2002, and some earlier). In that time Boeing has hired more than 9,000 IAM members, sold record numbers of airplanes and made significant improvements to productivity. We don’t see a reason to change the current language, which provides layoff protections for IAM employees in the event of subcontracting and enables Boeing to make business decisions to improve productivity, enhance competitiveness and sell more airplanes.

Q. What changes have been made to the contract to improve job security?

A. Boeing and the IAM will form a joint committee to study the feasibility of mitigating the disruption that results from large hiring and layoff cycles. The committee will complete its study within one year and make recommendations subject to approval by both Boeing and the IAM.

Q. The IAM says they have lost jobs to outsourcing. Is that true?

A. No, Boeing has added more than 8,000 new IAM jobs in the Puget Sound area since the 2005 contract negotiations with the IAM.

Q. Why does Boeing continue to ship our jobs overseas?

A. Since the last contract was negotiated in 2005, Boeing has hired more than 9,000 IAM-represented employees and more than 4,000 SPEEA-represented employees in the Puget Sound area. Placing work with suppliers and partners in the home countries of our customers can be a condition of sales. Being part of the global economy is a business reality today. The best way to preserve the great jobs here at Boeing is to make sure we are competitive and can continue to attract customers from around the world. The success we’ve enjoyed in recent years suggests we’re doing that.

Q. Why does Boeing work with global suppliers?

A. To compete in a global market, we must respond to customer expectations and seek the best capabilities both inside of Boeing and worldwide. Approximately 90 percent of our backlog for new commercial airplanes comes from customers outside the United States. To maintain market access and win orders around the world—which supports thousands of jobs in the United States—we must work with suppliers around the world. Our international partners bring proven, industry-leading capabilities to our products.

Q. Would Boeing benefit from a strike that gave its 787 suppliers a chance to catch up on production while giving the company an excuse for late deliveries?

A. Absolutely not. Many of Boeing’s major production lines - including the 737, 747, 767, 777, P-8A, AEW&C and F-22 - are based in the Puget Sound area. A strike would shut down all of these lines and that would not be in the best interest of our employees and their families, our suppliers, our customers or our investors.

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2008 Negotiations Process

Q. How did Boeing approach this year’s negotiations?

A. Boeing intended for negotiations with the IAM to be open and transparent. To that end we proposed that the Company and the union:

  • Begin negotiations early, resolve issues sooner and move away from last-minute bargaining,
  • Listen and understand each others’ positions,
  • Respect each other and continue talking when we disagree, and
  • Seek solutions that are in the best interest of our employees, our customers, our communities and our company.

We took the opportunity to conduct these negotiations differently than in the past. We recognized that our employees have worked hard for Boeing’s recent success and decided that they deserved a new approach to negotiations that enables them to share in Boeing’s success and reward them for helping to sustain our success without breaking stride.

Q. What were the main issues in these negotiations?

A. The main issues were rewarding employees with outstanding pay and benefits, and linking pay to their ability to continue generating productivity improvements that enable us to meet customer commitments and win new business in a fiercely competitive market. That’s how Boeing will continue to provide outstanding jobs for generations to come.

Q. How were these negotiations different than in 2005?

A. New leaders are in place at the company and at the IAM. We’re experiencing unprecedented success in the market as a result of our product line, our business our strategy and employees continuously improving productivity. This success has enabled us to add more than 8,000 new jobs in the Puget Sound area since the 2005 negotiations with the IAM.

What hasn’t changed is that we still face relentless competition from Airbus, EADS, Northrop Grumman, Lockheed Martin and other aerospace companies. For Boeing to be successful in the long run, any additional costs associated with increased pay and benefits must be covered by productivity gains.

Q. The company has had three consecutive years of strong commercial airplane sales. How did that success impact 2008 negotiations?

A. We’ve achieved success in the market by continuously improving productivity as well as our products and services. Employees have worked hard to bring about these gains. We focused on reaching agreement on a contract that enables employees to share in Boeing’s recent success while allowing us to meet our commitments to our customers and win new business in a fiercely competitive market.

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