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Boeing Union Bosses

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Once again union leaders roll the dice hoping the NLRB will save them. The Wall Street Journal explains.

Boeing’s eight-year contract offer included a 1% wage increase every other year starting in 2016 on top of annual cost-of-living increases. Pension accruals would be frozen, and traditional defined-benefit plans would be replaced with 401(k) accounts with a generous employer match.

In return for these changes, Boeing offered to sweeten the basic pension benefit multiplier to $95 per month from $85, yielding an additional $2,400 annually for a new retiree with 20 years of service. Upon approving the contract, workers would also receive a $10,000 signing bonus and an effective job guarantee for the next two decades.

These pay and benefit modifications would save Boeing about $2 billion over the eight-year contract and help the company compete with the Airbus A350 that has been a hot ticket with international carriers. Settling the contract in advance of the current labor agreement’s expiration in 2016 would also assuage concerns about future strikes, which contributed to the company’s 2009 decision to build its 787 Dreamliner in right-to-work North Charleston, South Carolina.

Boeing warned the union that rejecting the contract could jeopardize 20,000 jobs. Local machinist president Tom Wroblewski responded by saying this risk is worth taking to preserve the union’s “sacred” traditional pension, though a pension won’t amount to much if workers lose their jobs.

Perhaps the machinists figure they can count on intervention once again by the National Labor Relations Board. After Boeing announced production of its 787 in South Carolina, the labor board filed charges against Boeing for illegal retaliation. The agency’s acting general counsel Lafe Solomon withdrew the charges in 2011 only after Boeing agreed to generous wage increases and to build its new 737 MAX in Washington. The NLRB’s new general counsel is longtime labor friend Richard Griffin.

But relying on politics to save jobs is risky business in a world of competition. Boeing executives are trying to avoid becoming the next GM or U.S. Steel and they’ll build aircraft elsewhere if the Seattle union stays trapped in a nostalgic past of lifetime guarantees and 30-year pensions. Politicians may pander to unions but they also can’t defy business reality.

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E.J. Smith - Your Survival Guy

Preparing your investments and family for when disaster strikes.
E.J. Smith is the Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH, where he completed course-work in Practical and Defensive Handgun, Conceal Carry Pistol, Shotguns, Precision Scope Rifle and Kidnapping Prevention. E.J. plays a Yamaha Recording Custom drum set with Zilldjian cymbals. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com. Sign up here to receive all the best content from Richardcyoung.com each week.