from Henry V, by William Shakespeare
I suppose it seems quite pretentious for me to use this famous line, but I think it is entirely appropriate. I have been asked over and over why, after negotiating for more than a year, are we still at it. The simple answer is that we have not been able to reach an agreement. Members rejected the only offer made so far, and the SPEEA negotiation teams have not been able to recommend anything proposed by management since then. The reference above to a famous battle is a fair analogy. We are in a battle with management over the direction we think Boeing should take, and once again, you will get to cast your vote on that question.
I believe the reason we are still at odds with management is because we don't understand each other. Management has a different view of the enterprise than we do. For them, it is all about profit. If costs can be reduced, profits can increase. I think for most of us, it's about providing products and services we can take pride in and pass that legacy on to the next generation of workers. It is becoming apparent that every level of management is being driven to cut costs in every aspect of our business. It really was only a matter of time before the squeeze was put on the employees. This makes me think of a saying I heard years ago – that it's possible to make a pizza so cheap nobody will buy it.
Let me say it in a different way. If we reduce costs without evaluating the impact on the entire enterprise as a whole, there is a real risk of sub-optimizing the result. I think we are traveling down that road. Some recent examples are obvious.
When management outsourced some design responsibilities to suppliers on the 787, the coordination costs increased dramatically, because of the inexperienced workforce. The suppliers did not always understand the subtleties of how all the parts and assemblies have to meet the exacting and sometimes conflicting requirements of the overall design. In some cases, the misinterpretation of interface requirements caused redesign and rework of existing parts and assemblies which caused more unplanned delays and cost increases.
This piecemeal approach seems to dominate the philosophy of the last contract offer. Each section of our contract was independently sub-optimized to drive out every possible cost without regard to what was left.
First, the salary pools were reduced to what could be considered the absolute minimum – market-driven salary reference tables based on an equivalency which may only exist in the mind of the evaluator.
Independently, the benefits plans are squeezed to the minimum. Employee premium contributions were increased not based on the value the employees are delivering, but on a comparison to what other companies provide. The comparison is only on what management thinks they can get away with forcing employees to take.
The sub-optimization continues with offering a defined contribution pension plan that results in a 40% reduction in retirement benefits based on our modeling, using reasonable assumptions on inflation, earnings and risk.
Each of these areas results in a substantial reduction in the total compensation package. But it doesn't stop there. Even Ed Wells Partnership is targeted for what is effectively a reduction in funding. The Ed Wells Partnership is used by a vast majority of our members to improve their skills and help maintain the company's competitive edge by improving our ability to provide technical innovation in our products and productivity in the workplace.
So what do we want? If what I hear in the workplace is the sentiment of the majority of our members, it is simply to share in the success we have helped to create. We have enjoyed good benefits and meaningful opportunities for career growth at Boeing. It is clear to me that this has created a culture of excellence valued by our customers. This is the secret to our competitiveness. We strive to design, develop and build the products and services that our customers respect and desire. We do not believe competitiveness is based on the lowest cost. We believe the lowest quality is based on the lowest cost. You can make a pizza cheap enough nobody will want it.
We are returning to negotiations with Boeing management in a few days, I am certain you will soon see the next contract offer. What I am less certain of is what Boeing management thinks they will have to add to that offer in order for you to vote for it. One thing should be very clear – if half the people plus one more vote to accept the next offer, we will live with that contract for the next four years. We don't have to accept a sub-optimized contract.
My last words concern the strike authorization your negotiation teams will ask for on the next contract vote. We need that authorization if we are to bargain effectively – if this next offer is rejected. I do not advocate that we have to strike, but you may decide that work stoppage is necessary if management is unwilling to offer a contract that respects our contributions and rewards our competitiveness.