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Message to Employees

August 23, 2012

***The following message is from Michael P. Delaney, Commercial Airplanes vice president of Engineering, to all members of the BCA Engineering function.***

Our approach to negotiations with SPEEA

I thought I would take the opportunity to share my thoughts regarding the current negotiations with SPEEA.

First, as a member of the Boeing engineering team, my objectives are pretty simple. I want the engineering team in place to complete the 787 family, to invest in the 737 and 777, to continue to provide world class support and services to our customers, and to be able to start the long-lead research and development of the next new airplane. I want my engineers and technical team to be rewarded with market-leading total compensation. And I want my engineering team to be competitive now and ten years from now, so we have the opportunity to capture new work and achieve the long run of product development and production our customers desire. I also believe you expect me to help find the balance between market premium and the future competitiveness of our team.

Contrary to what you may be hearing or reading in the news or through other sources, Boeing has been engaging and will continue to engage in meaningful negotiations with SPEEA. This is a process and I, along with all members of the Boeing negotiating team, take it seriously. A portrayal of the company's negotiations approach as focused on "takeaways" is misleading. For example, the characterization of where the market movement for engineering or technician compensation is relative to the previous contract as a takeaway is at best "new math." When Boeing lays its final proposal on the table, the value of the total compensation for our engineering team will continue to be market-leading.

Last week during negotiations with SPEEA, we shared information on the competitive market dynamics for the commercial and defense businesses. Some members of the SPEEA negotiating team said they didn't care about our views of the market or how we fit in that market - just drop an offer. But we feel it's critical for them - and you - to understand the reasons behind any proposal. In that regard and despite the union leadership's objections, we intend to follow our process for providing the data that underpins every proposal. The reason I feel so strongly is that, like me, you are engineers or technicians and will want to "pressure test" the assumptions and data.

We engaged early with SPEEA leadership and we are, in fact, ahead of where we would normally be in the negotiations process compared to previous negotiations. This early engagement was based on discussions I had with Tom McCarty (SPEEA president) last year where we talked about addressing the most critical issues early. We knew that a change on how we offer retirement benefits for future hires was going to be a hard discussion. Therefore, Boeing teed-up retirement benefits for new hires first in an effort toward complete transparency about the important interests for the company.

You are now seeing individuals characterizing our actions as a "respect issue" reminiscent of the year 2000 timeframe. I couldn't disagree more. Today, engineering is more valued by our company from top to bottom than at any time in my career. And I will stand behind my own words when I say, "Engineering is the center of all value creation" and "We are an engineering company that builds really cool products."

In closing, I encourage you to engage in the process. Read all the information provided by SPEEA, from Boeing and from other sources you trust. We have set up a special webpage 2012 SPEEA negotiations where you can find detailed information on the negotiations and proposals. I hope you read it, digest it, analyze it and run the numbers for yourself. I realize there are a lot of nuances in any contract of this complexity. If you have questions or concerns, talk to your manager or Human Resources. In the end, when the time is right, please vote. Don't let others decide your future. When available, judge the contract proposal based on your self-interest and vote.

Mike