IAM best and final offer:
questions and answers
- Contract Overview
- Pay
- Health care
- Retirement
- Sustaining our Success / Business Environment
- 2008 Negotiations Process
Contract Overview
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 starting wage, 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.
Pay
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 wage.
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.
Health Care
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. Under the mandatory generic program, do I have to use a generic drug?
A.Many brand name drugs have a generic equivalent available, and when there is not a generic equivalent, the brand name drug can be purchased at the brand formulary and brand non-formulary copay. There may be circumstances where participants cannot tolerate the available generic, and there is a review process where the approval for brand name drugs will be made when appropriate.
Retirement
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.
Sustaining our Success / Business Environment
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 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.
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.