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FAQs

Frequently Asked Questions


2012-13 SPEEA Negotiations BAFO QA

Q. Is Boeing canceling Virtual Office and Telecommuting arrangements?

A. There is NO company directive regarding Virtual Office. The recent directive on virtual work is limited to a specific organization – the Airplane Level Engineering Integration (ALEI) organization. The entire organization is comprised of approximately 600 employees, a small subset of which does some form of virtual work. In that organization, we are committed to working with individuals who would have undue hardships that might be created by this situation. Boeing's Virtual Office policies are unchanged.


Q: Why not give future new hires the ability to choose the retirement plan they will have?

A: We have been straightforward about the reasons for seeking this change in the retirement program for future new hires.

First, the new plan represents a more predictable funding obligation that will allow us to invest in your and Boeing's future. That's because company contributions to a defined contribution retirement plan are predictable based on the number and age of employees covered.

Second, the existing plan is indeed very rich - out of step with what our competitors offer their new hires. The retirement program for future new hires - combined with market-leading pay and market-leading medical benefits - provides our future employees with a total compensation package that is outstanding. It would be uncompetitive for us to continue to offer future hires the BCERP. It seems prudent and reasonable to make this change for future SPEEA-represented new hires, as we have for other Boeing new hires across the enterprise since 2009. It will not affect current employees now in the plan.


Q: Why won't Boeing guarantee never to change or freeze my pension in the future?

A: No company, including Boeing, could prudently offer to make a pledge to employees that there would be no future change to pay or benefits that could affect them. As we've all seen in the past, it is impossible to predict the future in a way that could plausibly insure you, and the company for that matter, against unexpected, unanticipated events. As always, there are government regulations that we must comply with that cause changes to employees' pensions.

However, you should recognize some facts:

The desire to protect against unexpected future events is understandable, but it isn't realistic on this issue. The plain fact is that this proposed change in our BAFO to the retirement plan for future new hires is the same as that for nonunion employees and executives since 2009, and for 24 bargaining units. It is about preserving the long term financial health of the company and continuing to offer competitive pay and benefits for all employees. We need to address the issue now rather than put it off until it becomes a crisis in the future.


Q: What is the value of the retirement program Boeing is proposing for new hires? SPEEA says the retirement program Boeing is proposing for future new hires is 40 percent below the value of the traditional pension.

A: Under the proposed defined contribution plan for future new hires, early-career new hires who fully maximize their VIP savings by contributing enough for the full company match may have up to 150 percent replacement of their pay at the time they retire at age 62 (depending on investment results. That is well above what financial advisors recommend today. SPEEA has evaluated the new retirement program using assumptions that we believe yield an unrealistically low value for the new retirement program.

We have been straightforward about the fact that the new plan is not as rich as the defined benefit plan covering current employees, which is out of step with our competitors because it is so rich. We do want to be above market with the new plan, but the question is how much above our competitors do we want to be? The proposed retirement program for future new hires walks the line between providing an outstanding, market-leading benefit while not getting so far above what our competitors are offering to hurt our competitiveness.

It is important to note that one benefit of introducing the new retirement plan for future new hires, as we've done for new nonunion and executive hires since Jan. 1, 2009, and that is in place in 24 collective bargaining agreements across the enterprise, is that it addresses the issue before it becomes a crisis. In that way, the change actually helps the current defined benefit pension by altering the unsustainable path we had been on.

One testament to the new retirement program is that Boeing has been able to hire almost 20,000 new employees into this new retirement program since its introduction.


Q: Why isn't Boeing willing to promise that future changes to taxes, legislation and regulation won't hurt employees?

A: We firmly believe that no company can prudently pledge to employees that there would be no future legislative- or regulatory-driven change to pay or benefits.

To take a specific example among many raised by SPEEA, we think it's very unlikely that "scrap the cap" legislation, which would remove the limit on how much income would be subject to the Social Security tax, will be enacted. It is a proposal that has been raised in the past, but has never received broad support in the Legislature.

Boeing just cannot protect employees against external changes like tax increases - the company is not protected from such changes. What we can do, and have done, is promise to SPEEA that if there are external changes like this, we will sit down and discuss them.


Q: If Boeing has made guarantees to executives that they won't be hurt by such changes, why can't you make the same guarantee to SPEEA?

A: The guarantee that SPEEA is referring to, protecting Boeing executives' pension benefits from changes related to the Social Security Wage Base (SSWB), which caps the amount of income subject to Social Security taxes ($113, 700 in 2013), has no relevance in this case. There are differences in the pension plan formulas covering SPEEA-represented employees and the ones covering executives and nonunion employees, and the SSWB is simply not a factor in the formulas for executives and nonunion employees.

Boeing executives participate in the same Pension Value Plan (PVP) as nonunion employees, and this plan doesn't consider the Social Security Wage Base, and therefore wouldn't be affected if it were changed.

Executives also participate in the Supplemental Executive Retirement Plan (SERP), which also doesn't consider the SSWB.

The pension plan covering SPEEA-represented employees, the Boeing Company Employee Retirement Plan (BCERP), does consider the SSWB in its formula. During the life of the next contract, we estimate that about 30 percent of the SPEEA-represented employees will retire under the formula that uses the SSWB. Other employee benefits will be based on either the basic benefit or a pre-1993 formula that doesn't consider SSWB.

Finally, it should be noted that the Supplemental Executive Retirement Plan is unfunded and is offered at the discretion of the Boeing Board of Directors, which can discontinue future benefit accruals at any time.


Q: Why do you call the new retirement program "enhanced"?

A: "Enhanced" refers to improvement over the current 75 percent Boeing match in the Voluntary Investment Plan (VIP) up to 8 percent of an employee's salary. This is currently available to SPEEA-represented employees and nonunion employees hired before Jan. 1, 2009. The "enhanced" version of this defined contribution plan includes the addition of annual company contributions of 3%/4%/5% (based on the employee's age) regardless of whether the employee contributes anything.


Q: Does Boeing's best-and-final offer put retiree medical benefits at risk for current employees?

A: Boeing's best-and-final contract offer makes no such proposal. Retiree medical is unchanged from the prior contract. In the event that Congress makes changes such as increasing the Medicare eligibility age, we have committed to talk with SPEEA about the impact.


Q: SPEEA says that Boeing's proposal to replace the defined benefit pension with a defined contribution 401(k)-style retirement savings plan is the first step in the company trying to make the same change for current employees. Is that true?

A: The pensions for current employees are not affected by the proposal for a new retirement plan for future new employees. Pensions are a matter for bargaining, and Boeing could not unilaterally modify the pension.


Q: Does Boeing think it doesn't need SPEEA-represented engineers and techs to work 787 issues and restore confidence in that plane?

A: We have the utmost respect for our entire engineering workforce, including those represented by SPEEA. That is a big reason for our decision to drop several key provisions of earlier proposals for current employees even though the proposals were important to the company.

SPEEA has threatened a strike, which would be detrimental not just to the employees it represents but to all of Boeing and our customers. We have acknowledged this reality by maintaining that in the event of a work stoppage, we would call on the full resources of The Boeing Company to support our customers and protect the business for the long-term best interest of all of us.


Q: What is the value of the retirement program Boeing is proposing for new hires? Is it 40 percent below the value of the defined benefit pension, which is what SPEEA has said?

A: We estimate that a 25-year-old new hire, starting out at $60,000 a year, fully maximizing their VIP savings for a full company match and retiring as a Boeing employee at age 62 will have as much as 150% of their pre-retirement income available in retirement under the new defined contribution-only retirement plan. This includes retirement income from employee/employer contributions to the VIP, and social security. As a comparison, the same employee participating in the current defined benefit pension plan would have approximately 160% of their pre-retirement income available in retirement. We have provided SPEEA with information that shows the potential income replacement for the Defined Contribution-only retirement plan. SPEEA has evaluated the new retirement program with assumptions that we believe lead to an unreasonably low estimate of the value for the new retirement program. It is true that the DC benefit is of lower value for long-service employees. However, with the changes, we are still market leading (about 26% above our aerospace peers).

We have also been up front about wanting to change the retirement plan for future new employees for two basic reasons: First, the new plan represents a more predictable funding obligation that will allow us to invest in new products. Second, the existing plan is indeed very rich - out of step with our competitors, in fact. We do want to be above market with the new plan, but the question is how much above our competitors do we want to be?


Q: Why did Boeing initially reject the proposal to simply extend existing contracts?

A: In fact, we agree with this approach to settle the contract and focus on challenges facing the company. That is one reason we agreed to roll forward key economic terms of the contract for existing employees, including four more years of annual 5 percent salary adjustment pools for both Profs and Techs, and no additional paycheck contribution for health care. We are proposing to continue the defined benefit retirement plan for our current employees (regular salary increases and annual pension basic benefit increases boost pension benefits for existing employees). For future hires, however, we propose to change the retirement program to a defined contribution plan, which is not only consistent with the approach our competitors have taken but is a market-leading plan as well. For Boeing, the change is vital to the long-term competitiveness of the company and increases our ability to invest in the future.


Q: Is Congress considering legislative changes that would raise the amount of income subject to Social Security taxes? According to SPEEA, that could mean "a drastic reduction in pension growth" for those retiring under the alternate pension formula. Is that true?

A: The company has committed to meet with SPEEA to discuss the impact should Congress, in fact, take such an action.


Q: Why won't Boeing promise to adjust the contract if Congress makes legislative changes in things like Social Security taxation?

A: Looking at news stories, one could always find new proposals being floated that could impact the contract. Rather than addressing every hypothetical about what may happen in the future, our contract offer for current employees is unchanged from what SPEEA accepted in the past, except where both sides agreed to changes. Boeing has a solid record of meeting its commitments to employees, and we have promised to discuss with SPEEA changes to regulations or legislation that would impact the contract. As for future employees, they will obviously know what the retirement plan is before they decide to join Boeing.


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Best-and-final offer (BAFO) details

Q: What is Boeing's best-and-final offer?

A: Profs and Techs would see salary pools of 5 percent for each year of the four-year contract, including minimum guarantees carried forward from the 2008-2012 contract (2 percent minimums for Profs, 2.5 percent for Techs) and 0.5 percent promotion funds for both groups.

Under this revised offer, Profs would average $89,800 in additional pay (including an average Employee Incentive Plan (EIP) award each year and the promotion fund) over the life of the agreement. Techs would average $69,700 in additional pay (including the EIP and the promotion fund).

The offer includes annual increases in the pension basic benefit for current employees to $91 per month at the end of the extension. For future new hires only, the proposal includes an enhanced defined contribution retirement program instead of the traditional pension.

The offer does not include any change to paycheck contributions for health care insurance.


Q: Will there be a strike if employees reject the proposal and authorize a strike?

A: SPEEA's Bargaining Unit Committee has the authority to call a strike "at any time" after its members vote to give it strike authority, which has not happened. We cannot speculate on what SPEEA will do if our employees reject our BAFO and give the union authority, but once authorized they are not required to ask again before calling a strike.


Q: Why didn't you make this offer a long time ago? We could have approved the contract without so much angry rhetoric.

A: The time is right for all of us to concentrate on our business challenges. For many months, we tried to reach agreement on terms that would reward our employees while staying close enough to market trends - for wages and benefits - to remain competitive. Our initial offer was just that - initial. That's what the negotiating process is for. After months of further discussions and listening, this BAFO represents our third economic offer following the initial offer in September, the second offer just before Thanksgiving and the third offer on Jan. 11. Our BAFO rolls forward economic provisions of the last contract for current employees, which, given the circumstances, is the reasonable thing to do. In cases where we reached tentative agreements with SPEEA on new language in the contract, we have included those changes.


Q: You say the retirement proposal is market-leading for current employees. What about your proposal to eliminate pensions for future new hires?

A: That proposal, which has already been accepted for Boeing employees in 24 other collective bargaining units, including SPEEA-represented engineers in Wichita, and is in place for nonunion Boeing employees, is in fact best-in-class among the U.S. aerospace companies we measure ourselves against. It also addresses a significant long-term financing issue for the company. Our pension liability is currently $76 billion, which is bigger than the total market capitalization of the company. Practically speaking, the total liability and the volatility in year-to-year funding obligations of the traditional pension takes away from our ability to fund things like critical Research & Development, which is a key reason Boeing and other major U.S. employers have moved away from offering a defined benefit pension.


Q: You have said that employees need to be prepared to pay more for health care insurance, and you have already increased paycheck contributions for many nonunion employees as well as most union groups, including the IAM. Why did you drop this proposal for SPEEA?

A: As SPEEA itself said, this is a critical time for the company to focus on important issues facing the company, and our proposal reflects a desire to meet the union halfway. We did this by agreeing to extend the economic provisions of the existing contract for current employees and introducing the new retirement program (already in place for many new Boeing employees since 2009) for future new hires.


Q: Can you explain how you came up with the increased salary offer?

A: We want to put our employees in the upper echelon of the competitive range when it comes to salary. Since the vast majority of SPEEA-represented employees work in the Puget Sound area, we've added to our earlier proposals.


Q: How does your offer keep up with the Consumer Price Index (CPI)?

A: We've based our salary adjustment proposal on the relationship between our salaries and the market salaries rather than on simply matching the CPI or other inflation metric. Utilizing market salaries gives a more comprehensive perspective on our competitiveness since doing so considers the supply and demand of skills and work, geographic economic conditions and inflation in the price of goods and services. This is why the annual salary funds have been, and with this offer will continue to be, more than the annual change in CPI.


Q: SPEEA says the issues Boeing withdrew shouldn't have been in the offer in the first place. Is this really progress?

A: Most of the issues SPEEA raised about the initial offer could have been easily addressed at the negotiating table. Since they chose to send the offer out for an immediate vote, we weren't able to have those discussions. Now that we have, we've been able to withdraw or amend many of those aspects and finally get back to the top economic elements of the package. Moreover, the proposals Boeing made were reasonable. Many of them were an effort to streamline processes.


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Schedule

Q. What is the schedule for the vote for BAFO?

A. Ballots were mailed the week of Feb. 4; SPEEA has said voting ends at 5 p.m. Feb. 19. SPEEA will count the ballots for or against the best-and-final offer as well as a strike authorization after 5 p.m. Feb. 19.


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SPEEA information

Q. How many Boeing employees are SPEEA members?

A. The SPEEA contract expiring in October covers about 15,600 professional engineers and 7,800 technical workers, mainly in the Puget Sound region, Portland and Utah. Those employees work in several different Boeing business units. Boeing has seen a net increase of nearly 2,500 SPEEA-represented employees in Puget Sound, Portland and Utah since 2009.


Q. What is the difference between the SPEEA professional and technical units?

A. Professional Unit employees apply engineering discipline to research, design, develop, test and evaluate products or processes. Technical Unit employees hold specific technical job classifications to support the engineers. While engineers and technical workers bargain at the same time, the contracts are separate and independent agreements.


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SPEEA Contract

Q: Will Boeing provide a new proposal since SPEEA membership voted to reject the initial offer?

A: Boeing is committed to reaching a contract agreement. We intend to listen to what the SPEEA negotiations team has to say to fully understand the viewpoints and objections. As was true when we made our initial proposal - we are ready to continue discussions and consider any proposals or counterproposals.


Q: Oct. 6 has passed; when do the current contracts expire? Will there be a work stoppage?

A: The contract will remain in effect until Nov. 25. On Nov. 25, the contract will terminate as a result of SPEEA filing a 60-day termination notice per Article 23 of the contract. No strike can take place until that date. There have been a number of occasions where this provision in our contract with SPEEA has provided a window to complete negotiations.


Q. Do the two units negotiate separate contracts?

A. Yes, each unit has its own contract.


Q. What is the length of a new contract?

A. As with other details of the contract, the length can be a subject of bargaining between the company and SPEEA. There is no pre-established length.


Q. What are the major issues in negotiations this year?

A. We are focused on critical issues for engineers, technical employees and the company, including salary adjustment funds, health care and retirement benefits.


Q. Are you optimistic about the ultimate outcome?

A. Yes. Both the company and SPEEA want to reach an agreement that is in the long-term best interest of our employees and the company. The company and the union will work hard to bring about that result.


Q. What are we doing to reduce the amount of overtime worked by our engineers and technical workers in BCA?

A. First, we recognize that high rates of overtime over an extended period are unproductive for our team, both professionally and individually. High overtime is driven by a variety of business conditions and is not consistent across BCA. However, it is clear that production rate increases taking effect are driving high overtime for many engineering and technical employees. The completion of development programs, transition to more stable production and achievement of the planned rate increases should reduce overtime significantly in many areas.


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Pay & Benefits

Q: Is Boeing proposing to take away retiree medical benefits?

A: We have withdrawn our proposals regarding Article 16.3 and 16.4, thus reverting to the language that is in the current contract.


Q. Is Boeing planning to maintain long-term disability and basic life insurance for individuals serving our country on military leave in excess of 3 months?

A: Boeing has amended its proposal in order to keep the military leave policy benefits as they are in the current SPEEA contract. A broader plan to streamline the leave of absence policies across Boeing had the unintended consequence of impacting the military leave policy; however, on Oct. 2 Boeing provided the SPEEA negotiations team with revised language to keep the military leave policy benefits.


Q. In Boeing's contract proposal, is there a monthly paycheck contribution for dental benefits?

A: No. While Boeing is asking employees to share more in health care benefits, there will be no paycheck contribution for the dental benefit. On Oct. 2, Boeing provided the SPEEA negotiations team with language stating this.


Q. What does the company say about pay?

A. The company has said it remains committed to provide above market total compensation that will continue to attract and retain the type of engineering and other technical talent that will allow the company to innovate and execute on its programs. The company has shared with SPEEA information derived from the most widely recognized source for labor market information (Mercer-SIRS) about projected salary growth in the engineering and technical fields. Our engineers and technical workers are now well positioned to the market and the market for wages is expected to grow between two and three percent per year for the next several years.


Q. Will Boeing negotiate with SPEEA for the same kind of changes to health care that are being implemented for nonunion employees across Boeing?

A. Boeing has introduced changes to employee contributions for health care insurance across the enterprise for most groups, including those represented by unions. The changes Boeing is making have already been made by many major companies. Even with the changes, Boeing continues to provide excellent medical benefits and our employees continue to pay less of the cost on a percentage basis than is typical in the market.


Q. What does the company say about retirement benefits?

A. The company has shared what Boeing and other companies are doing to meet the challenge of funding ever-increasing long-term pension liabilities. Since 2009, new nonunion employees at Boeing, including newly hired executives, have participated in an enhanced savings retirement program - or 401(k)-type defined contribution plan - rather than a traditional defined benefit - or pension plan. Many other companies have done the same. The company's proposed change in the retirement program for SPEEA-represented new hires will continue to provide a market-leading benefit level and an opportunity to build significant savings for retirement.


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Work Placement

Q. Why does Boeing continue to hire contractors after the problems it has experienced with outsourcing?

A. We recognize that Boeing's direct technical and engineering team is the foundation of our company's success and competitiveness, and we have hired 2,500 SPEEA engineers and technical workers since the last agreement was signed. Whenever possible, we hire through our normal process. However, when there are urgent needs, our operations leaders may choose to bring in contract engineers and technical workers instead of hiring employees who may need to be laid off at some point.

Boeing's business has traditionally been cyclical. Our aim is to reduce the sharp swings in employment levels that typically happen with business cycles.


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Business Environment

Q. What are we doing to reduce the amount of overtime worked by our engineers and technical workers in BCA?

A. First, we recognize that high rates of overtime over an extended period are unproductive for our team, both professionally and individually. High overtime is driven by a variety of business conditions and is not consistent across BCA. However, it is clear that production rate increases taking effect are driving high overtime for many engineering and technical employees. The completion of development programs, transition to more stable production and achievement of the planned rate increases should reduce overtime significantly in many areas.


Q. What is Boeing's long-term plan for Puget Sound?

A. Puget Sound is a global hub of aerospace talent and the headquarters of Boeing Commercial Airplanes. It continues to be home to tens of thousands of good aerospace jobs. To be the leading aerospace company in the world, we need to be better designers, mechanics and leaders than the competition. We have to provide the best product - and value for the money - in every market we serve.


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Employee Do's and Don't's

Q. Can employees put tent cards on their desks in support of SPEEA?

A. In general, things like desk tents, T-shirts and buttons are okay as long as they aren't offensive or create an unsafe or disruptive work environment. Also, these sorts of items are permissible in a worker's personal work space, but they aren't permitted in public areas such as the cafeteria. However, it normally is fine if SPEEA members staff a table in a common area such as a cafeteria as long as it's not during work hours.


Q. Can employees represented by SPEEA talk to the media about negotiations?

A. When the company wishes to communicate publicly, it has a well-established means of doing so. Only those officially designated by Boeing are authorized to speak on behalf of the company through the media. Employees may want to contact their union representative before speaking on behalf of SPEEA. Any media inquiries seeking the company's position regarding negotiations must be referred to Communications.