KIRO Radio Interviews on the SPEEA Strike

Phil Condit Interview                Harry Stonecipher Interview
Audio of Condit Interview        Audio of Stonecipher Interview
(29 minutes, courtesy of                    (7 minutes, courtesy of KIRO News Radio)
the KIRO Dave Ross Show)

Following are excerpts of a KIRO radio interview with Boeing Chairman and CEO Phil Condit on the Society of Professional Engineering Employees' strike in Seattle. The interview was Wednesday, Feb. 16.

Interviewer: Long-term, it sounds like you have ticked off engineers.

Condit: There are lot of people who are worried, there are a lot of engineers who are worried. We are are going toward a very different economy. Our business is going to change. That is going to be worrisome and troublesome and scary to a lot of folks. What we've got to do is make sure that we can be competitive in that new world so there will be jobs, and we're going to have to provide a lot of training, a lot of education so that people can, in fact, operate in a very different environment.

Interviewer: Are you saying that engineers need to accept some takeaways in order for the company to compete?

Condit: In some areas, yes, and they will be balanced. In other words, in this particular offer, there is a wage package in the first year for engineers that totals 8 percent. There are some differences in the benefits package. Part of those are reflective of an environment that is very different in the U.S. We're one of the very few companies that has medical coverage at the level we do, and even at the level we have proposed we'd be in the very high end of the companies in the U.S.

Interviewer: But is it fair to say that you are indeed asking the engineers to sacrifice something?

Condit: No, if take the whole package, if you take any one item the answer can be yes on one, and no on another. In total, from an economic standpoint, this is a significant improvement over where they are.

Interviewer: If that's the case why do you think they're on strike?

Condit: I think there are a number of reasons. I think there are these worries about 'where the world is going, what's my role in it? Is Boeing interested in the long-term or only the short-term? Does anybody care about me as an engineer, do they understand that I am important to this company?' All those pieces are mixed in and they're very deeply felt, and part of the reason I'm talking to you is that there are a lot of them who are going to listen. Engineers are absolutely crucial to where we're headed and I want them to know that.

Interviewer: But they think, at least the ones who worked at Boeing for a long time, as opposed to those who came on board with the merger of MDC, that the old Boeing approach, which was 'we do it right,' has been replaced by a new approach that says, 'we do it efficiently, even though it may not be right' … that cost now is pre-eminent.

Condit: Not correct: And part of this is a change. Cost is critical. But so is quality, so is the performance of the vehicle, and part of that is a recognition that we do have to pay attention to what our product costs. If we can't sell it then there aren't any jobs at all.

Interviewer: What is the effect going to be on your military contracts if this strike continues?

Condit: It will vary by contract. In some cases it will have an impact, and in others it won't have any impact at all. Clearly, where we're headed is trying to find a way not to have a strike continue. But that doesn't mean you just say, 'OK, whatever it is you want, we'll do it.' We want to settle it, but we recognize in the interim there will be some impacts.

Interviewer: At some point, doesn't it become a national security issue? If this is a long-haul strike and military contracts have to be delayed, doesn't that go beyond the company's interest and become a national interest?

Condit: I don't think so. I don't think that anything that I've looked at, at this point, would impact any program at a level that I would begin to worry about national security issues. I don't think that will happen.

Interviewer: Going back to the way the engineers feel … I've had calls from a number of them … They think you don't respect them, you don't like the union and you're trying to break them.

Condit: That part is absolutely not true. That (engineering) is the environment I grew up in. I was an engineer in Boeing. That's where I started. I feel very strong about the importance of engineering in Boeing. There are a lot of reasons people feel lack of respect. Some of them have to do with the issue you just said: The world is changing, it doesn't look the same. Why aren't we doing a new airplane right now … all of which have to do with markets and economics. Some of them have to do with comparisons. They look at this offer and they want to compare it to what the IAM got or what somebody else got, and if somebody else got a different package, then I see that as a lack of respect. I'd love to debate that issue, because I do not believe that's the case.

Interviewer: Did you give a better contract to the IAM?

Condit: We gave a contract that fit the IAM. For example, one of the issues of contention is the bonus. If you gave a bonus to the IAM, why didn't you give one to SPEEA? In the case of the IAM, their wages are in fact very competitive in the marketplace, so we gave a smaller wage package and a front-end bonus cause that made a lot of sense. In the case of the engineers right now we're about 6 percent below market, so we know we've got to put money directly into wages. So we put the whole package, the whole economic package, into the wage side, because if we had put part of it into a bonus, we were going to still end up behind in the market. We tried to tailor each package to the individual group.

Interviewer: You're acknowledging the engineers are under paid?

Condit: Absolutely. That's exactly why there's 8 percent in there.

Interviewer: How did they get to that point? Maybe that's the problem?

Condit: Because the wage rate for engineers has changed, and we are recognizing that's the case. We need that 8 percent. It is set in there so we can make sure that we are paying engineers what is competitive in the marketplace.

The entire management team sits down and looks at each case, tries to decide where we need to go, what fits in Southern California, what fits in St. Louis, what fits in Seattle … how do we make this company competitive in a world market where we can continue to be successful? We want this company to grow.

Interviewer: You've mentioned that cost is critical. Engineers come back and say you've made profitability No. 1. How do you convince them that cost is important and that you still care about good design?

Condit: I think you have to continue to talk about it. The real issue is that our customers want the whole thing. They don't want a low-cost, low-quality product, they want a low-cost, high-quality product. They want an airplane that will do the job they want. So that's the challenge any business has. How do you provide a high-quality product at a cost that your customer can afford?

Interviewer: Regardless of the strike, are engineers leaving to work for somebody else?

Condit: There always are some. The actual attrition rates that are in this workforce are relatively normal compared to what we've seen over the years.

Interviewer: So there has been no particular exodus.

Condit: No, absolutely not.

Interviewer: Who has to make the first phone call to get these negotiations off the dime?

Condit: That's one of the roles that the mediator plays. The mediator looks at where both sides are and whether there's an opportunity to make some progress. And if the mediator thinks that there's some opportunity to make some progress, then we can move ahead.

Interviewer: Well, that's up to you. You're the top guy, you're calling the shots. You can either call the mediator and say 'OK, we're ready to give a little more on this point' or 'no, we have nothing more to say.' What is your stand now? Is there any negotiating room?

Condit: There always is room to negotiate, but in the end, the total package has to make economic sense. Part of the problem we were running into was we were getting additional demands but no indication of a willingness to negotiate, to move around and to discuss how we solve this problem.

Interviewer: Are you saying that you are standing firm on the overall cost of the package, but within that cap, you could move the pieces around?

Condit: Absolutely.

Interviewer: However, there will be no more money in the total package?

Condit: Exactly right. We've worked that very hard trying to make sure we had the right thing. I think, if you look at the offer -- and one of the reasons we put the offer in the paper was so that people could just sit and look at it -- I think if you look at it in total and step back, it is a good offer. Now, do you want to move some stuff … what are the things that are the most important … That's what the negotiating process is all about.

Interviewer: Is the total amount of money in the package going to stay the same? You're firm on that?

Condit: Yes.

Interviewer: I don't know though. You're saying no more money is on the table? And it doesn't matter how long this goes on, that's going to be your position?

Condit: There always is room to try to look at this. But what I'm trying to say is that I've had to consider the economic impact on the company, where it's going, what it's competitive characteristics are. For example, if somebody came in and said to move a whole bunch out of wages, I'd say no, because at the fundamental level, that's just going to carry a problem downstream that says we've got engineers that are paid below market.

Interviewer: At what point does this go on too long and you start losing money? What's your motivation? I can understand where it's tough on somebody who is making $50,000 or $60,000 a year and hasn't got that much in savings, he can't hold out forever. You, Phil Condit, you're set, right? I mean, personally, you will not suffer no matter how long the strike goes on.

Condit: Oh no, that is NOT true. That is absolutely not true.

Interviewer: Well, tell us about it.

Condit: My compensation is directly tied to the performance of this company, and if this company doesn't do well, I don't do well. That's absolutely certain.

Interviewer: But you still get paid. Not as much perhaps, but you still bring home a paycheck?

Condit: Yes, and I am working every day, too.

Interviewer: So you do feel that even at your pay level, you feel economically motivated to get this thing settled as soon as possible?

Condit: Yes.

Interviewer: OK. Alright.

End of interview.

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Following are excerpts of a KIRO radio interview with Boeing President Harry Stonecipher on the Society of Professional Engineering Employees' strike in Seattle. The interview was Wednesday, Feb. 16.

Question: We understand that you aren't very happy with the headline in the Seattle P-I this morning that reads "Boeing shrugs off strike." Is the company shrugging this off?

Harry Stonecipher: I don't think we're shrugging it off at all. In fact, the whole reason we held the press conference yesterday was to indicate that we take this very seriously. We think there's been a lot of misinformation out there so if you look in the PI and The Seattle Times today you'll see some very large ads. These are nothing more than to say to a number of engineers and technicians -- have you really looked at what we've offered, because a lot of emails that I get indicate that there is some real confusion about what has been offered.

Q: There seems to be some confusion about what was said at your conference yesterday. You said you are willing to talk, but are you willing to make any type of concessions to the requests that SPEEA has made?

Stonecipher: Let me say this, the reason the talks didn't work the last time is because we found we were negotiating against ourselves. SPEEA does not come forward. It's not a negotiation. It's 'gee, we'd like this and why don't you give us that.' I think the thing we're trying to indicate is that there are some differences here. There's some flexibility in the numbers. We've put a very good offer on the table compared to everything else in the nation. And all we're saying is that there has to be some give and take. We're not going back to the table and negotiate with ourselves.

Q: But the give and take…
Stonecipher: That's all we're saying.

Q: But the give and take goes both ways…
Stonecipher: Absolutely, and so far we've been giving.

Q: And have you made the call to SPEEA, to Mr. Bofferding, to say let's get this thing over with and let's get back together?

Stonecipher: No, we have not because he has not indicated at all that he's interested in negotiating an agreement. What he wants is more, more, more. In fact, I think he just came out with another demand last night that says, 'Gee I think we'd like agency fees.' So every time we have a conversation, and ah, and I shouldn't say that. We're listening to rhetoric through the press and over the phone -- email, I should say, and all those things indicate that they aren't very serious about it. They stuck their feet in the concrete and say 'when you meet our offer, we'll be back.' Well, that's darn unfortunate, because we have an awful lot of wonderful people out there, and all we want to do with some of the actions we took yesterday and today -- and we'll continue to take -- is to say we really value what you do for this company. We tried to indicate that with the offer. Please understand the offer. Please look at it. Please consider what your future and the company's future is. And let's get together.

End of interview

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