More pension changes coming to Boeing

Credit: KING

More pension changes coming to Boeing

Print
Email
|

by GLENN FARLEY / KING5 News Aviation Specialist

kgw.com

Posted on February 21, 2014 at 9:11 AM

Updated Friday, Feb 21 at 9:11 AM

On Sunday, members of the Machinists Union District 837 in St. Louis will vote on a new seven-and-a-half-year contract extension, similar to what Machinists in Washington state barely approved on January 3 to win production of the 777X airliner.

One thing in common is that the St. Louis Machinists are also being asked to move away from a traditional pension plan to a 401k style “defined contribution plan.”  In those plans employee contributions into a retirement fund are matched by the company, with the money invested in things like stocks and bonds. That move has been met with anger and resistance in the Puget Sound.

The St. Louis labor agreement was announced Wednesday night and is being recommended by the leadership for passage. Unlike the Puget Sound region of Washington, which is seeing a booming business in airliner production, St. Louis factories are focused on fighter jets and military hardware and are struggling with tighter defense budgets.

Right now production of the F-18 Super Hornet is slated to end in just two years in 2016 unless more orders can be found.  Boeing is expected to make the case to the Pentagon that by lowering the relative price of the jets with a new labor deal it can bring in more business and secure jobs. The plant also makes big parts for the C-17 cargo jet for the U.S. Air Force that is slated to shut down in late 2015.  Boeing assembles the C-17 in Long Beach, California.

Boeing says its St. Louis regional facilities under its Defense, Space and Security organization employs close to 14,850 employees, and is expected to keep making the F-15 fighter for the Saudi Air Force along with Joint Direct Attack Munition, Harpoon missiles and Small Diameter bomb.

The question now is how quickly does the rest of the company follow in moving away from traditional pensions?

On an earnings call with stock analysts and journalists on January 29, Boeing CEO Jim McNerney said, “We still have a very large pension obligation we need to address over the next few years.  And we will address it...stay tuned.”

The transition could take years to play out and is expected to involve the company’s non-union work force as well, including top management.  Non-union employees hired since 2009 are already on 401k type plans, but those on the job before then have been able to maintain their traditional pensions.

“The company has been taking steps to manage these growing and unsustainable liabilities,” said Boeing spokesman John Dern in a statement from the company’s Chicago headquarters.  “The company’s pension liability tops all U.S.-based corporate pension plans and is the largest in the aerospace industry.”
 

Print
Email
|