Boeing Attempt to Drop Pension for New Hires Sparks Conflict

April 18, 2008 (PLANSPONSOR.com) - A proposal by Boeing's top labor negotiator, Doug Kight, to enroll new hires into a 401(k) plan instead of the company's pension plan has union leaders predicting a strike.

The Seattle Times reports that Tom Wroblewski, district president for the International Association of Machinists (IAM) Local 751, noted that in 2005, when Boeing proposed taking away retiree medical benefits for new hires, negotiations ended in a strike, and said he believes workers will do the same again. Ray Goforth, executive director of the white-collar Society of Professional Engineering Employees in Aerospace (SPEEA), predicts the same for union members.

Kight said Boeing’s current pension plans are “top-of-the-market,” premium plans, but impose a future liability of $46 billion. The proposal for a 401(k)-type savings plan with a flat company contribution “retains a premium place in the market while at the same time it addresses the financial concerns,” he said, according to the Seattle Times.

Other proposals from Boeing will likely be agreed on by the unions. Boeing will propose a wage increase, particularly for entry-level workers, and also an incentive pay plan tied to productivity gains and based on set targets close to the shop floor, the newspaper said.

Bargaining with the IAM opens May 9, while talks with SPEEA will start in September.

Boeing is working to complete assembly of the first 787 Dreamliner and its first flight later in the year, and a standoff with either union could delay the timeline.

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