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Labor talks between Spirit AeroSystems and the Machinists union could serve as a welcome new model for companies and unions around the country, experts say.
The typical relationship between management and labor is a "marriage of necessity rather than one of love," Leeham Co. aviation consultant Scott Hamilton said. "Managements don't want unions, period. And unions largely view management as the enemy."
Even Southwest Airlines, renowned for good employee relations, is finding it more difficult to deal with its unions. And the relationship between Boeing and its unions continues to be contentious.
Spirit and the Machinists, however, are taking a different approach, leaders and experts say, entering talks as partners and in the spirit of cooperation.
"Maybe Spirit can show the way," Hamilton said.
Negotiations between Spirit and the union opened Tuesday, the first full talks since Spirit was formed in 2005 after Boeing divested its Wichita commercial aircraft division. The Machinists represent about 6,000 of Spirit's 10,500 employees in Wichita. The current contract expires June 25.
"Clearly, a cooperative, peaceful relationship between labor and management is very important for the long-term health of the company," said Spirit CEO Jeff Turner.
Spirit and the union are seeking to work together to include flexibility and versatility in the next contract, rather than negotiate what have historically been rigid agreements that last for the life of the contract and don't take changing business and economic conditions into consideration.
"Our business is a dynamic business," Turner said. "We live in uncertain times." Flexibility will allow Spirit to mitigate problems as they occur.
Since Spirit was founded, "the world changed," said Tom Buffenbarger, international president of the Machinists union.
"The union recognizes that," he said. "We're prepared to talk about that.... I see the potential for a lot of good coming out of this."
Benefits for both sides
Turner and Buffenbarger declined to say what the new labor contract might include.
But it will be different, Turner said. He has two main goals: keeping the company healthy and keeping its team together for the future.
In the long run, adding flexibility to the contract would increase job security. In downtimes, it would give Spirit options to minimize the hurt before turning to layoffs.
"Layoffs should be an absolute last resort," Turner said. Employees would also "share the gain" in good times.
An agile agreement makes it more of a living agreement, Buffenbarger said. "How do we massage that to protect all the stakeholders?... When times are good, how did the employees get to share, and when times are tough, what do we do then?"
So far, Spirit has been fortunate in the economic downturn and has not had layoffs.
"We don't know what the future is going to hold," Turner said. "We need the flexibility to respond."
Analysts say the approach to the negotiations could provide benefits for the union and the company.
"That's quite a novel idea," said Gary Chaison, professor of industrial relations at Clark University at Worcester, Mass. "One of the problems with collective bargaining is that it freezes everything.... It sets in stone the terms and conditions of employment."
Now, essentially, "they're trying to take the uncertainty and live with it," he said.
It's an approach Boeing should try, Chaison said.
The Machinists have struck Boeing twice in the past five years. And the union is smarting from Boeing's recent decision to open a second 787 assembly line in Charleston, S.C., a nonunion facility, rather than in Washington state. Boeing says it must do so to keep a line open in case of a strike. The union notes that Boeing struck a deal for $900 million in incentives from the state of South Carolina.
"In the aftermath of the decision to locate Line 2 in Charleston, the IAM was furious, feeling used and lied to," according to a report on Boeing co-written by Hamilton for AirInsight. "Such is the state of labor relations going into 2010."
In the next round at Boeing, "the unions and management must find a way to reach acceptable accords for the good of all stakeholders, and in the case of Washington state aerospace to tone down the perception that this heavily unionized state cannot have labor peace."
Clearing the trust hurdle
Having a flexible agreement can be positive, because circumstances can change, Hamilton said.
"An inflexible contract means give-backs in very bad times despite firm contracts, to the resentment of workers," Hamilton said. "If a contract is flexible, members know what can happen in bad times, and they have an upside in good times."
This type of negotiating could help employers around the country be less resistant to bargaining, Chaison said.
"I think one of the problems is... that when you have a collective agreement that lasts for three, four or five years, employers will fight unionization, (because they) can't afford to get locked into something."
The flexibility also can help labor.
"The union is saying, 'We don't want to be the senior partner in failure and the junior partner in success. We don't want to take the sacrifices and when times get better get very little for it," Chaison said.
The union hopes this kind of approach will benefit the aerospace industry, as it faces increased competition from China, Russia and Brazil.
"This is also the contract that this union hopes very deeply will set the bar and set the stage for a new way of bargaining in the aerospace industry. Not just with Spirit, but we're carrying the weight of an industry on our shoulders in these negotiations," Buffenbarger said.
The aerospace industry is the "last great American industry," said Machinists spokesman Bob Wood. "But we have global competition. We can't wait until... until the jobs go away" to take action.
Employees must be part of the process.
"We know how to build airplanes better than anybody," Wood said. "We can find new and better ways. We're the smartest workers. We're working to find ways to empower employees."
Forging a new kind of contract will take trust, Turner and Buffenbarger say.
"Both sides have to get over the hurdle and start trusting one another," Buffenbarger said.
Turner agreed.
"We're trying to change the model," he said. "We're going to have to give each other the benefit of the doubt."
